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Last week in Shanghai, Internet Corp. for Assigned Names and Numbers (ICANN), the agency responsible for administering the Internet, conducted the most important meeting in its brief history. Following months of debate on institutional reform, the ICANN board approved the elimination of board positions reserved for the general public, shelved plans for Internet user participation through on-line elections and removed most of the mechanisms that hold ICANN accountable.

This recent round of reforms brings to mind the story of the new executive, who on his first day of work is greeted by three envelopes on his desk with instructions to open one in the event of trouble. The company runs smoothly at first, but trouble soon arises and the executive opens the first envelope. It advises him to blame his predecessor. That succeeds in the short term, but soon new difficulties arise. The executive opens the second envelope. It advises him to restructure the organization. That again succeeds, but soon the executive is faced with more trouble. He opens the third envelope only to find instructions to prepare three envelopes.

The completion of the ICANN reform process marks the conclusion of the second-envelope stage. ICANN first blamed its problems on governance and policies that preceded it and then moved to radically reform itself by eliminating many of the checks and balances that were developed to ensure wide consensus on new policy initiatives.

While these moves may have bought it time — in September, the U.S. government, which has consistently exercised its authority over the domain name system, extended the agreement granting ICANN power to run the Internet domain name system for another year — governments of the world are now making clear their desire for a more prominent role on matters of Internet governance.

For example, European countries are plainly uncomfortable with U.S. control over the Internet. Although the U.S. government pledged to relinquish its power to ICANN back in 1998, that still has not happened. One of the most important developments at the Shanghai meeting was the announcement that the European Commission will assume leadership over ICANN's governmental advisory committee, a key vehicle to influence the agency's policy.

The United States seems unable to develop a single coherent policy on ICANN. Until recently, Internet governance seemed inconsequential to the Bush administration, which did little to tip its hand on the subject. Several members of Congress, on the other hand, playing to U.S. protectionist sentiment in this election year, have been much more vocal by raising the prospect of greater U.S. control.

The Canadian government made its views known as part of an ICANN consultation process it launched late last summer. While Ottawa acknowledged the need for ICANN reform, it was the only government to openly voice its support for the continuation of board positions for the general public through on-line elections. It also hinted at its concern over U.S. control, applauding Washington's activity to date but advocating the development of a process that facilitates broader governmental participation.

As governments play out this Internet turf war, the organization most likely to emerge as the governance leader is the International Telecommunications Union (ITU), an international body with 189 member countries. The ITU has long vied for Internet governance responsibility, arguing that it possesses the experience and expertise needed to develop consensus policy positions that will satisfy governments worldwide.

Last month, ITU issued its clearest signal yet that governments are looking for a change. Under the title Internet Names: A Matter for Both Government and Private Sector, it approved a resolution on the management of multilingual domain names.

The resolution marks a dramatic change in approach to Internet governance. While ICANN was created with the belief in private sector leadership on domain name matters, government is now of the view that it must also play an active role on these issues.

This battle between government and the private sector may reach its climax in Montreal in June, 2003, when ICANN will hold its first meeting in North America in almost three years. Internet governance will be very much on the minds of many governments as they prepare to be greeted by their own collection of envelopes.