The New IANA Bylaws: Who Controls the Money? By J. William Semich President and CFO .NU Domain Ltd http://whats.nu bsemich at mail.nu The latest set of proposed bylaws (version 5) for the New IANA Corporation (Internet Assigned Numbers Authority), released on September 29 at IANA's Web Site at http://www.iana.org/bylaws5.html, is seriously flawed by its lack of fiscal accountability to all of us who will use its services and pay its fees. If the bylaws are approved unchanged by the White House as the basis for the Internet's first independent governance mechanism, the new Internet Authority would be able to set a wide range of Internet-related fees of any amount without constraint, float bonds of any amount which must be funded by future revenues, as well as collect additional fees of any amount to invest for undefined possible future needs, all such to be paid for by you, me and our children, the Internet's users of today and tomorrow, without their review, approval or control. The new version of the proposed bylaws for the new Internet Authority will likely be submitted today to Ira Magaziner of the White House, under the terms of the White House "White Paper" released last January, to create the replacement for the US Government's current contractual arrangement for management of the Internet, which is set to expire today ( Sept. 30, 1998). But the new bylaws are completely devoid of any provisions to create any type of fiscal accountability for this, the Internet's first all-powerful, government-sanctioned independent Authority. Although the new bylaws make it clear that the source of the new Internet Authority's revenues will be the Internet's end users and service providers, it leaves all spending, borrowing, investment and other financial decision-making solely in the hands of the Corporation's board of directors, who's members specifically "have the duty to act in ... the best interests of the Corporation and not as representatives of their Supporting Organizations, employers or any other organizations or constituencies." (Article V, Section 8) Nowhere in the bylaws is the Board of Directors required to consult with any outside groups, experts, or other interested parties on how best to set its fees or plan its budget. Nowhere in the bylaws is there any provision for any kind of independent budget review or hearing mechanism or approval process for the budget, borrowing, or any other fiscal decisions; And nowhere in the bylaws is there any provision for any kind of independent fee-setting review process or approval mechanism, either by those who must pay the fees (the Supporting Organizations, who represent the consumers of the services to be provided by the new Corporation) or by any independent body of fiscal experts. All these fiscal decisions are made solely by the new Internet Authority's own Board of Directors. The relevant language in the proposed new bylaws makes this absolute power of the Board clear: FIRST, it gives the board absolute control over any spending or borrowing decisions: "Article IV, Section 1 (a) "the powers of the Corporation will be exercised, its property controlled and its business and affairs conducted by or under the direction of the Board." SECOND, it gives the board absolute control over the fee setting decisions: "Article IV, Section 2. FEES AND CHARGES The Board shall set fees and charges for the services, rights and benefits provided by the Corporation to the Supporting Organizations and others, with the goal of fully recovering the reasonable costs of the operation of the Corporation and establishing reasonable reserves for future expenses and contingencies reasonably related to the legitimate activities of the Corporation." And THIRD, it gives the Board the sole authority and absolute control over setting its annual budget, with no requirement that it actually meet that budget or that the budget pass any kind of review process, all this in one simple line of the new Bylaws: "Article V, Section 25. ANNUAL BUDGET The Board shall prepare an annual budget, which shall be published on the Web Site." These three phrases are the total extent of any language in the new bylaws that might be construed as setting ANY spending, fee setting and raising, budgeting, borrowing, investing or any other fiscal constraints on the board of the new Internet Authority which will be the primary manager of the single most important communications resource in the world. Such an all-powerful and fiscally unaccountable organization as would be created by the new bylaws is a classic textbook "Public Authority" in its structure, and that is the crux of my problem with the fifth set of IANA bylaws released on Sept. 29. Look closely at any publicly-funded independent Authority in the US and you will find a self-perpetuating, quasi-governmental organization whose spending decisions cannot be challenged, who spends the public's money like water, who has absolute power over its particular area of activity, but no accountability to the public. In the present case of the bylaws for the new Internet Authority, there is minimal accountability for its policy decisions, and that is cause enough for concern. But there is NO accountability for its borrowing, spending and fee-setting structure. There needs to be some kind of mechanism in the new entity that will create a counter-force to the typical Public Authority's inevitable desire to grow and to spend more and more money and increase its sway in the world. The counter-force to spending increases could be a Budget Review Committee solely comprised of the groups that will fund the new Internet Authority. Or it could be a Finance Committee made up of independent, world-renowned fiscal experts who have no vested interest in the new Internet Authority or the Internet per se. Or it could be a committee of government finance experts with experience bringing public spending into line. Or it could be some combination of the above. It would be a real tragedy if, in its first efforts at self-government, the Internet community were to hand over management of the Internet to yet another quasi-public Authority, who's essence is perhaps best defined in an article I co-authored nearly ten years ago: "Authorities constitute a permanent, expansionist government, collecting and spending more and more public money, running up more and more public debt, and making more and more critical decisions on the public's behalf with each passing day. And because authorities do all this out of site - and beyond the control - of the general public, they constitute, finally, a Shadow Government." "Inside the Shadow Government," by John Strahinich and J. William Semich, cover article, Boston Magazine, November, 1989. About J. William Semich: Currently: President and Chief Financial Officer .NU Domain Ltd http://whats.nu "One of the top 20 Top Level Domain Name Registries in the World" (Source: Http://www.domainstats.com/iso.cfm) Formerly: - Director of Financial Analysis for the City of Boston - Chairman, Finance Committee, Massachusetts Bay Transit Authority Advisory Board (The MBTA's Budget Review and Approval body) - Financial Adviser to the Mayor of Boston for Tax Policy and Planning - Assistant to Collector-Treasurer, City of Boston - Deputy Director and Executive Secretary to the Board, Boston Economic Development and Industrial Commission Achievements: - Co-author, "Inside the Shadow Government," Boston Magazine, November, 1989, selected as one of the "Top 10 Magazine Investigations of 1989," by Investigative Reporters and Editors, Inc. (IRE); - Lead investigator and financial consultant, WBZ-TV Boston's "I-Team," in-depth 1995 investigative report on the Mass. Turnpike Authority's actions over a ten year period to extend it's life using fiscal manipulations; - Co-author, "The Money Pit," Boston Magazine, September, 1986, investigative article on abuses by the Mass. Convention Center Authority in its redevelopment of the Hynes Convention Center -------- Logged at Thu Oct 1 17:12:56 MET DST 1998 ---------