The PH Domain and the Need for Policy Reforms

A Position Paper prepared and submitted by the Philippine Domain Name Authority Convenors (PhilDAC)

Executive Summary

The Domain Name System (DNS) keeps order in the way Internet names are assigned worldwide, and the Philippine (PH) domain is part of this vital system.

The PH domain is important to all Filipinos because it is the only globally recognized country code domain assigned to the Philippines. Web sites and e-mail addresses that use the .PH suffix are understood to be Filipino in origin. Because of this, the government, private businesses, academic institutions, and other organizations use the PH domain to promote the Philippines and its products and services. The PH domain is also important because local companies use it to conduct e-commerce in a way that distinguishes them as Philippine companies.

In many other states, the country domain is managed by organizations that adequately represent the local Internet community. In the best democratic tradition, people who are most affected by policies also have a say in how they are formulated and carried out.

Today, the PH domain is controlled by a private individual and DotPH Inc., the company he owns. This has many disadvantages that work against the country:

•Lack of consultation in domain policy-making. Best practices documents stress the importance of community consultation, but the current administrator has been delinquent in this area, preferring to make unilateral decisions and policies without consulting the local Internet community.

•Monopolistic behavior.  DotPH Inc. has no competitors in the PH domain space. As a monopoly, it has set the price of  PH domains at $35 a year, and resellers may not compete in terms of price. In contrast, .COM domains in the United States have dropped to as low as $9 a year because of competition. 

•Misrepresentation of the Philippine domain as a commercial domain to be used for telephones. DotPH promotes PH as a global domain for phone companies, diluting the essence of the Philippine domain.  

•Erratic policymaking. The PH domain administrator has had a history of creating new policies arbitrarily, disregarding the welfare of domain consumers. Before 1999, PH domains cost only P900 for life, with no annual renewal fees. With no prior consultation, DotPH raised this to $35 a year.  

•Conflicts of interest. The PH domain administrator also owns an Internet service provider, which is in a position to benefit from this relationship.

These disadvantages hinder the growth of Internet usage in the country and urgently need to be addressed through policy reforms. The government, as the latest developments in Australia prove, can play a key role in creating a healthier environment for the local Internet community, where e-commerce and e-businesses can thrive.

1.	What is the PH domain and why is it important to the Philippines and its citizens?

The PH domain is part of the Domain Name System (DNS), which keeps order in the way Internet names are assigned worldwide.  Domain names are generally used as a convenient way of locating information and reaching others on the Internet.

Domain names such as YAHOO.COM, used for websites and e-mail addresses (such as www.yahoo.com or jose@yahoo.com) are assigned by registrars, who make sure no duplicate names and addresses are issued. Companies and individuals who want to identify themselves as being from the Philippines may register and use a Web or e-mail address ending in PH (for example, ). 

Internet addresses that do not have a country "extension" are called top level or World Wide Generic domains. Examples are .COM, .EDU, .NET, .ORG. and .INT. Internet addresses that carry a country extension are called country code top level domains (ccTLD).

The PH domain is important to all Filipinos because it is the only country code domain assigned to the Philippines on the Internet that is globally recognized.

Web sites with the PH suffix are automatically understood to be from the Philippines by the global community.

Because of this, the government, private businesses, academic institutions, and other organizations use the PH domain to promote the Philippines and its products and services.For example, Philippine tourist destinations; industrial and science parks; arts culture and media; financial institutions; and thousands of commercial establishments are all promoted on the Internet using the PH domain.  As an example, the Official Government Site of the Republic Of The Philippines is using the domain name www.gov.ph.

The PH domain is also important because it is used by local companies to conduct e-commerce in a way that distinguishes them as Philippine companies.

The PH domain was assigned by the Internet Assigned Numbers Authority (IANA), which is now part of the Internet Corporation for Assigned Names and Numbers (ICANN), both based in the United States. Under ICANN guidelines, the PH domain is a community resource to be shared by all Internet “stakeholders” (individuals, companies, Internet users, Internet service providers, Web site designers, Web site owners, etc.) in the Philippines. The assigned administrator must act as a trustee  of the domain for the entire Philippine Internet community. 

2.	What is wrong with the way the PH domain is currently managed?
 
Since 1990, the PH domain has been administered and controlled by a single private individual, Joel Disini, and the company he controls, DotPH Inc. As such, a single individual controls a vital national resource, the PH domain, and profits from managing this community resource. By and large, he has done this without much consultation with the community he is supposed to serve. When he decided to start charging registration fees in dollars rather than pesos, he consulted no one. When he decided that PH would be used to promote a mobile phone technology that his company had developed, he also consulted no one. 

In other countries, the local Internet community has a significant say in managing the domain because:

-It affects the national image and interest.

-Proper representation is equitable and fair and is the growing trend in the global Internet community.

-Proper representation guards against conflicts of interest and unfair competition, which may result when management is entrusted to one individual or a private company.

For these reasons, the domain management in other countries has been passed on to government, academe, non-profit or similarly neutral groups.

Unfortunately, there are no adequate mechanisms for community representation in the current set-up.Under pressure by people who want reforms, the PH administrator has offered to create a policy advisory board for DotPH Inc., but this board would be powerless to effect changes that would affect DotPH Inc.’s commercial interests. For example, the board would have no power to 1) change the fees charged by DotPH; 2) allow the entry of other registrars to compete with DotPH; or 3) decide that the use of PH to mean anything but the Philippines is inappropriate.

Because of this lack of representation, the current administrator can do anything he wants, such as using the PH domain for private commercial gain.A good example is his use of PH as a marketing tool for a mobile phone technology that his company owns. We think that this works against individuals and companies who use PH domain to promote their connection to the Philippines. 

Another major problem is that the current situation opens itself to conflicts of interest.For example, Mr. Disini also owns the E-mail Company, an Internet service provider (ISP). The information that Mr. Disini has as the domain administrator may be unfairly used by his E-mail Company to the detriment of all other ISPs. For example, in the past, the E-mail Company attracted clients by offering “free domain names” – something other ISPs couldn’t do.

Interestingly, another conflict of interest looms on the regulatory front. The current PH controversy is being heard by the Legal Cluster of the Information Technology and E-Commerce Council (ITECC), a committee chaired by Mr. Disini’s brother,  lawyer Jesus Disini Jr. or  J.J. While J. J. Disini says he will inhibit himself in the PH discussions, his continued presence in the body casts serious doubts on its neutrality.

The current administrator is the only Philippine representative to ICANN, the non-profit group assigned to manage the global domain name system. Ironically, while he represents all Philippine Internet users, he is not accountable to any of them. In fact, at an ICANN meeting in May 2001, Mr. Disini submitted a proposal that would diminish the role of the local Internet community, a fact that can be borne out by the minutes of that meeting.

By his words and his deeds, the current PH domain administrator has not lived up to his commitment to IANA or ICANN to be a responsible trustee of the PH domain on behalf of the Philippine Internet community. In June 2001, Mr. Disini filed a libel case against one of his critics, a case that was thrown out of court for lack of merit. In his affidavit, however, Mr. Disini claims that “the rights to the registry” were granted to him in 1990.  This is in direct opposition to the IANA document* that guides all domain name administrators, which states: “Concerns about ‘rights’ and ‘ownership’ of domains are inappropriate. It is appropriate to be concerned about ‘responsibilities’ and ‘service’ to the community.” 

3.	Doesn’t DotPH Inc. already have competition? Pseudo competition and other PH myths.

The short answer is no. DotPH claims that it is competing hard with registrars who offer .COM, .ORG, .NET or other top level domains. But the truth is, only DotPH Inc. can sell you a PH domain name. The company has many resellers, but they must all get their domains from DotPH Inc., which not only sets the price, but also discourages its resellers from competing on the basis of price. 

Today, if you are a Filipino or a Philippine company and you want a Web site that is globally recognized as being from the Philippines, you have no choice but to buy a domain name from DotPH Inc. or one of its resellers. That’s not real competition.

There are a number of other myths about the PH domain that you may have read or heard. We’ll try to tackle some of these here:

Myth: There is nothing wrong with commercializing PH and promoting it as a domain for mobile phones. After all, doesn’t Tuvalu market its TV domain as an identifier for television?

Tuvalu domains (.TV) are marketed to Web sites as the domain for Internet television under an agreement with a private US company that guarantees the government at least $4 million a year over 10 years. The deal has trebled Tuvalu’s national income, and has even allowed the state to fund its membership in the United Nations. In this case, the state gets a very tangible benefit from allowing its domain to be used. This is clearly not the case with DotPH, which will be the sole beneficiary when it exploits the PH domain to promote its DotPhone technology.

Even if DotPH Inc. were to pay the Philippine government (which it refuses to do) for the right to exploit the PH domain, we think the Tuvalu model is inappropriate for a nation that wants to promote itself as a serious global provider of IT and IT-enabled services. Doing so would put it in the same league as Tuvalu or Belize, which has transferred its rights to the .BZ domain to a company that wants to market it as a top level domain for “businesses”.  ICANN’s Vice President and General Counsel, Loius Touton, wrote an opinion about the use of the .BZ doing explicitly stating that the abbreviation .BZ has been assigned because it is the alpha-2-code abbreviation of “Belize” set forth on the ISO 3166-1 listl .BZ is not and never has been intended to present “business.”

Myth: The Philippine domain system would collapse if the administrator were hampered by the need to consult with the Internet community.

There are many good examples of consultation and effective administration. One good example is the Internet Society of New Zealand (ISOCNZ), which is the IANA-designated administrator for the .NZ domain. ISOCNZ has assigned the commercial day-to-day operations of the registry to a company called The New Zealand Internet Registry Ltd., which it owns. 

ISOCNZ itself is a non-profit society established in 1995 to foster coordinated and cooperative development of the Internet in New Zealand. ISOCNZ is not allied to any particular section of the industry, and is open to anyone who wants to influence Internet evolution in the country. Its membership includes Internet service providers, Web designers, public information groups and Internet users.

4. 	How did the present situation come about?

In 1990, the late Jon Postel, the architect of the domain name system, assigned the PH domain to Mr. Disini, who was the first technically qualified candidate to apply for it. From 1990 to 1994, Mr. Disini issued PH domains only to customers of his own company, the E-Mail Company, since there was very little local interest in the Internet at that time. This would change in 1994, however, when the Philippine established its first live link to the Internet, through the efforts of the PHnet Foundation, funded by a grant from the Department of Science and Technology (DOST). At this point, officials from the PHnet Foundation negotiated with Mr. Disini to assume the responsibility of running the PH Domain registry, but negotiations did not prosper. Under pressure, Disini promised to transfer the administration of .EDU.PH (for Philippine educational institutions), GOV.PH (for Philippine government use) and .ORG.PH to PHnet. He later reneged on the transfer of .ORG.PH. PHnet decided to transfer the .GOV.PH to DOST.

From 1994 to 1999, the PH domain administration was run informally, not as a fully formed company or foundation, but with Mr. Disini acting as an individual. Checks for PH domain registrations were made payable directly to Mr. Disini, and no official receipts were issued for these services. Domain fees ranged from P450 to P1,350 per domain, and were originally intended to be one-time charges, with no annual renewal fees.

In 1999, Mr. Disini established the PH Domain Foundation, Inc. as the new body charged with selling PH domains to the public. Domain registration fees were raised to $50 for two years, with an annual renewal fee of $25. The “lifetime domain” policy was removed.

In 2000, DotPH Inc. was established as the entity to deal with consumers and resellers. Registration fees were once again raised, to $70 for two years, with an annual renewal fee of $35. Subsequently, Mr. Disini also set up an organization called DotPhone Inc. to give his company a global face. Inquiries with the Philippine Securities and Exchange Commission show that DotPhone is not a Philippine-registered company.

In 2001, Internet users were invited to air their concerns to the Consumer Protection Subcommittee of the ITECC, then under the auspices of the Department of Trade and Industry (DTI). Negotiations between Mr. Disini’s group and the domain reform advocates fell apart following Mr. Disini’s declaration that he would never agree to turn over the management of the domain name registry to a more representative body, nor agree to allow other companies to compete with DotPH Inc. in selling PH domain names.

Following a high profile campaign for domain reform, Disini filed a libel suit against Fernando D. Contreras Jr. or JR Contreras, the spokesperson of PhilDAC, a group of Internet stakeholders that is working for PH domain reforms. In July, the Pasig City Prosecutor’s Office threw out Disini’s complaint for lack of evidence.

5. 	How are other countries managing their country domains?

A survey of other countries shows that a single, private monopoly is not the only – and certainly not the best – way to run a country code top level domain. In fact, in the Association of Southeast Asian Nations (ASEAN), the Philippines is the only country where the domain is managed by a private, for-profit entity. Here are a few examples of how other countries manage their domains:

Australia

The AU ccTLD  bears striking similarities with the Philippines. Upon its establishment in 1986, the .au ccTLD was delegated to a private individual , a network programmer at the .  The growth of the Internet in Australia necessitated changes in the AU administration. Per the IANA report found in http://www.iana.org/reports/au-report-31aug01.htm.

As the .au ccTLD has evolved to accommodate increased Internet usage under Mr. Elz's personal stewardship, the Australian Internet community has recognized that the task of administering the .au ccTLD should move from a single person's responsibilty to a private-sector self-regulatory regime capable of taking on the responsibility for administering the .au ccTLD in a manner that is more formally accountable to the community. In the past several years the Australian Internet community, with the assistance of the Australian Government, has been engaged in efforts to establish such an organization to facilitate continued robust and scalable growth and operation of the Internet naming system in Australia.

 The .au Domain Administration Limited, or auDA was formed as a non-profit company in April 1999 as the self-regulatory body for the .AU namespace. Just like PhilDAC’s proposed PH Domain Administration, auDA is based on the principles of private sector self-regulation that has allowed the Internet to flourish. Its structure reflects the principle that the Internet is best coordinated by private sector efforts, with governments playing a supportive and generally non-intervening role. That principle, embodied in Australian government policy, endorses industry self-regulation, with the government serving to ensure that the self-regulation serves the public interest.

In June 2001, auDA began the formal process to ask IANA to transfer management of the .AU top level domain from Robert Elz. That process began with a request for redelegation and involved efforts at close cooperation with the ccTLD manager and Internet community to achieve a consensus resolution in the public interest.   IANA in turn sought input from people significantly affected by the transfer, particularly those which the ccTLD had been established to benefit. In line with ICP-1, the policy that governs global coordination on the Internet, the parties affected include the relevant government or public authority. 

"The desires of the government of a country with regard to delegation of a ccTLD are taken very seriously,” ICP-1 says. “The IANA will make them a major consideration in any TLD delegation/transfer discussions.” 

Finally, on 31 August 2001, despite the objections of  Elz and Melbourne IT (the  for-profit business set up as a licensee of  Elz and which controlled the COM.AU), ICANN delegated the administration of .AU to the community-supported organization, auDA. ICANN concluded with the following statement:

”The structure proposed by auDA and endorsed by the Australian government is to have auDA undertake management of the .au ccTLD under appropriate oversight of the Australian government (concerning national public-policy interests) and ICANN (concerning global technical-coordination interests). This structure is consonant with the principle of private-sector responsibility for technical coordination under which the Internet has flourished. In reviewing the request and in light of the Australian Government's endorsement of auDA as the appropriate private-sector manager, the IANA concludes that, provided auDA's commitment to these responsibilities is effectively ensured, auDA is the appropriate delegee of the .au ccTLD.”

Singapore

The Singapore Network Information Centre (SGNIC), a non-profit organization, administers the Internet domain name space for .SG top level domain.  According to its mission statement, SGNIC is committed to providing Internet registry and information services in an efficient, effective and responsible manner, so as to ensure the smooth running of the Internet in Singapore. SGNIC was formed in October 1995 with the main purpose of administering the Internet domain name space in Singapore as well as to provide a forum for the local Internet service providers and regulatory bodies to discuss issues relates to the efficient administration of Internet services in Singapore. 

From then till the present, the policy and direction of SGNIC has been set by the SGNIC Committee which comprises all the major commercial and regulatory agencies involved with Internet in Singapore. SGNIC is made up of the Infocomm Development Authority of Singapore (iDA), and the country’s three ISPs, CyberWay Pte Ltd; Pacific Internet Pte Ltd.; and Singapore Telecommunications Ltd (SingNet).

Malaysia

The Malaysian Network Information Centre (MYNIC), a business unit within MIMOS Berhad, administers the name space for the .MY (Malaysian) top level domain under which six second level domains exist. These are .com.my, .net.my, .org.my, .gov.my, .edu.my and .mil.my.  A government-owned corporation,  MIMOS Berhad was established as the Malaysian Institute of Microelectronic Systems in 1985 and became a full-fledged department of the Ministry of Science, Technology and the Environment in 1990. It was turned into a corporation in 1996 to give it greater flexibility to create value-added innovations for the industry, society and nation. Today MIMOS remains a mission-oriented Research and Development (R&D) government corporation.

Canada

In December 2000, IANA approved the redelegation of the .CA top level domain from the University of British Columbia to the Canadian Internet Registration Authority (CIRA), a non-profit corporation established in 1998 to manage the .CA domain in the public interest. IANA’s decision for redelegation came after the Canadian government gave its recognition to CIRA as the appropriate administrator of the .CA top level domain, and after all three parties signed an umbrella agreement that envisioned a domain name management system marked by private sector leadership with governmental guidance. In justifying its decision, IANA cited “broad stakeholder participation” in CIRA’s formation as a key consideration.

There are many more examples of how country code top level domains around the world can be managed in a manner that takes into account the needs and views of the local Internet community. Unfortunately, the Philippines is not yet among this growing list.

Other Countries

A comprehensive report on all the top-level ccTLDs is attached as an appendix entitled auDA Competition Model Advisory Panel, Stage Two Report, Domain Service Provision: The Status of Competition Worldwide.  (Appendix F)

6.	What are our recommendations?

Now that we know what is wrong with our system, we should be able to fix it so that it can better serve the entire Philippine Internet community.

The first step we must take is toseparate the registry from the registrar. 

Without getting too technical, the registry is a list of people, companies, and information about their Internet addresses. The registrar is someone who has access to that list, sells domain names based on that list, and updates the list as needed.

Today, the registry and registrar are one and the same. As we’ve seen, this can lead to conflicts of interest that discourage fair competition. It also prevents other parties from becoming registrars in competition with DotPH, removing a major incentive for the company to provide better service at lower cost.

Our second recommendation is thatthe registry should be managed by an independent organization that is representative of the Philippine Internet community. 

We propose that we call this organization the Philippine Domain Authority or PhilDA, which will offer adequate representation to all interested members of the local Internet community, including individual users, Web site owners, civil society groups, Internet service providers, Web site designers; developers; the government, educational institutions, and business organizations both large and small. A specific proposal on PhilDA’s composition is in Appendix B, but this is a work in progress, and can be further improved and refined.

This proposal was drafted by the Philippine Domain Authority Convenors (PhilDAC), a group that was formed to assert community rights over the PH domain. [Please see Appendix C for a description of PhilDAC and its objectives.]

A very important third step we must take is to create a competitive environment to promote and sell PH domains. 

Experience has shown us time and again that competition is the best incentive to improve service and lower prices. The domain name industry should be no different. 

In the United States, ICANN removed the long-standing monopoly of Network Solutions Inc. The net result was lower registration fees for .COM just one year later, with prices dropping by as much as 71%.

Also, as we stated earlier, a truly competitive environment will guard against conflicts of interest and unfair competition. Since the registry, or list of Internet names and addresses will be administered by a neutral, representative body, no single corporation or service provider will benefit from exclusive, inside information. The danger that exists today will be considerably reduced.

Finally, a competitive environment will stimulate creativity and service orientation.

Again, experience is a good teacher. For decades, the Philippine telecommunications industry was marked by poor and limited service and high prices, served up by a giant monopoly. When competitors were finally allowed to enter the industry in the 1990s, services improved and prices dropped all around. Even better, spurred on by competition, telecommunications companies began offering new services that allowed their customers to communicate and do business more efficiently.

In concrete terms, we must allow other registrars to operate in competition with DotPH. Only then can there be real competition in the Philippine domain name industry.

So what will become of DotPH? We hope and believe it will continue to thrive, and perhaps become even bigger than it already is. Again, experience clearly shows us that a competitive market will expand the business for everyone. PLDT today is much bigger than it ever was during its days as a sheer monopoly because the telecommunications market expanded for everyone.

With the incentive of real competition, we expect DotPH strive even harder to maintain the loyalty and patronage of its customers. Certainly, it already has a head start over all other players in the field, since it has been in the domain name business since 1990.
 
Also, faced with real competition, DotPH will have even greater incentive to promote its DotPhone technology into the market, but it need not tie this to the flat PH domain, which should be reserved for all Philippine Web sites and addresses.

7. 	What can we do to help bring about reform in the PH Domain?

	The local Internet community, composed of Web site owners, developers, designers, Internet service providers, domain name resellers, and just plain Internet users, can take a number of steps to help bring about reform in the way the Philippine domain is managed.

	The first and most important step is to be aware of the issue and learn more about your rights as domain name owners and Internet users.The primary documents that govern domain registrars the world over are ICANN documents called RFC-1591 and ICP-1. These are available in Appendix B or on the PhilDAC Web site at www.phildac.org.

	If you wish to make a more meaningful contribution, you can engage in direct affirmative action by joining groups like PhilDAC and support its campaign for reform of the PH Domain.

	It is also important to let the current domain administrator realize that he is answerable to the public.

	Quickly and thoroughly report any complaints against the current ccTLD manager and his companies (DotPH, PH Domain Foundation, DotPhone Inc., and Domain Merchandising Services) to PhilDAC, the BIR (for tax-related complaints), or the DTI (for consumer complaints). Complainants must be prepared to provide documentary evidence such as provisional receipts, letters of complaint and responses, other correspondence.

The Philippine government can also play a vital role in bringing about reform. Legislators and public officials can:

-Protect the national interest by putting in place policies, mechanisms and recommendations that will ensure that the PH Domain is administered fairly, honestly, and equitably.

-Investigate possible conflicts of interest in the administration of the PH domain, particularly in the composition of government IT policy-making or regulatory bodies such as ITECC and the NTC.

-Engage in a dialogue with the private sector through various fora such as hearings conducted by legislative and regulatory bodies, on how to effectively manage the PH domain. This will give the local community a voice which it currently does not have.

-Officially and actively participate in international domain policy bodies such as ICANN, and the Government Advisory Council (GAC).