1. Who are the principal parties involved?
There are four major players in the discussions concerning the U.S. dominance of the internet and calls for an international body to take over: the United Nations, the European Union, the United States, and ICANN (Internet Corporation For Assigned Names and Numbers).
2. What is meant by "internet governance?"
When the term "internet governance" is discussed, it does not mean any of these bodies want complete or total control of all aspects of the internet. Instead, internet governance and the debate over it instead is primarily concerned with ICANN's control over the 13 primary root servers.
When people type in a URL like "http://www.google.com" a DNS (domain name server) is responsible for translating the URL into an IP address (like "126.96.36.199") to access the website. There exist thousands of DNS servers and it would be difficult for an individual computer to have a list of all these DNS servers and constantly keep track and update it. Instead, we rely on root servers to do this task. There exist 13 root servers with most residing primarily in the U.S.
3. What is at stake here?
Currently, ICANN sets all policies with the root servers, controls how the root nameservers are used, and can decide what entries go into the root zone files. And by virtue of having ICANN located in the U.S. (and with connections to the U.S. Department of Commerce) and having the majority of the root servers located physically in America, the American government has a large amount of influence with ICANN.
The U.N. and the E.U. has gotten involved by asking ICANN (and the U.S. government through proxy) to relinquish control of these root servers and move towards a international setup where multiple countries could participate.
4. What ethical concerns exist?
There are ethical concerns from both sides of the issue about the other side. The primary concern for the U.S. is the involvement of foreign states that may be looking for ways to block access to particular websites. Free speech is considered by many to be essential to the internet and countries without the necessary mechanisms to protect free speech like the U.S. may try to limit it. Thus the U.S. government has thus far rejected calls from others to voluntarily transfer control towards an international body. The last reason for avoiding transfer of internet governance to the U.N. or some other international body is that members of the international community have called in the past for some taxation on the internet transactions and exchanges, especially to fund such multinational organizations.
The concern on the side of the U.N. and the E.U. is that the U.S. government is holding an unfair monopoly on a global item. The internet encompasses all countries, developed and undeveloped, but currently the U.S. is the primary keeper of it. Additionally, there have been charges that the U.S. may abuse this power by controlling the rules and policies of the root servers to reflect U.S. values. The primary example of this is the failure by ICANN to establish the ".xxx" domain which had been tentatively approved but ultimately was not added due to withdrawn support from the U.S. Department of Commerce. Finally, another problem that may arise from the U.S. failing to relinquish control is that other countries may set up their own root servers to handle traffic within their country. What this may lead to is a fragmentation of the internet.