ICANN's plan to begin accepting applications for new generic top-level domains (gTLDs) in mid-2009 may have been derailed by last week's outpouring of opposition from the global business community and the United States Government (USG). Having been involved with ICANN for over a decade and having served on its Board for three years, I've never seen such strong and broad opposition to one of ICANN's proposals.
This past June, the ICANN Board directed its staff to draft implementation guidelines based upon the policy recommendations of the Generic Names Supporting Organization (GNSO) that ICANN should allow more gTLDs such as .cars to supplement existing gTLDs such as .com. In late October, the ICANN staff released a draft Applicant Guidebook detailing its proposal. The initial public forum on this proposal closed on December 15-with over 200 comments filed online.
In its December 18 comments, the USG questioned whether ICANN had adequately addressed the "threshold question of whether the consumer benefits outweigh the potential costs." This stinging rebuke from the Commerce Department merely confirms the consensus among the 200+ commenters on ICANN's proposal: ICANN needs to do more than merely rethinking its aggressive time-line for implementing its gTLD proposal or tweaking the mechanics of the proposal on the edges. Instead, ICANN needs to go back to the drawing board and propose a process that results in a responsible expansion of the name space, not merely a duplication of it.
United States Government's Wake-Up Call to ICANN
The comments submitted by the USG consisted of two letters. The first, from the Commerce Department's National Telecommunications and Information Administration (NTIA) began by citing the failure of ICANN staff to conduct a detailed study on the costs, benefits and implementation of a new gTLD process-as called for by an October 2006 ICANN Board resolution. NTIA then listed a number of prerequisites for implementation of any gTLD proposal, including:
Just as the U.S. government filed comments on the proposal only after ICANN's deadline for public comment had passed, other governments have indicated that they need more time to provide substantive comments on ICANN's proposal-including the Government Advisory Committee and the Australian government. The U.S. government's strong opposition to ICANN's proposal may inspire other countries to voice their own concerns in the next two months-which could derail ICANN's current plans to publish a revised draft of the proposal shortly before its next meeting in Mexico City the first week of March, 2009. If ICANN does not revise its aggressive timeline, the GAC and other governments will be commenting on the October 2008 Draft just as the ICANN staff is seeking new comments on the February 2009 draft. Given the timing of GAC deliberations, GAC probably will not be able to provide comments on any draft released in February until ICANN's June meeting in Sydney.
Global Business Community Opposition
A common thread of concern expressed among the majority of the submissions from the business sector is how the proliferation of gTLDs will significantly increase the cost of defensively registering domain names to protect trademarks and prevent consumer confusion. Currently, many global brand holders must maintain enormous portfolios of domain names (sometimes in excess of ten thousand). Only a tiny percentage of these domain names are actually used; the vast majority are variants on the names of a company's products or services, such as yah00.com. Because the existing procedures for protecting trademark holders cost far more than it costs to register a single domain name, there currently exists a gross imbalance between "offense" (cyber-squatting) and "defense" (brand protection). Without additional safeguard mechanisms in any new gTLD application procedure to protect existing trademarks, every new gTLD created would simply compel existing trademark holders to duplicate their domain portfolio for that new domain name-for example, if .search were created, Yahoo might have to register yah00.search (as well as every other domain name it has currently defensively registered). This could mean additional costs of millions of dollars every year in purely defensive registrations-all because of the lack of procedural safeguards.
The sheer outpouring of opposition to ICANN's proposal makes it difficult for the non-expert to know where to start, and few readers are likely to take the time to digest all 200+ comments. So here's a quick overview of those comments I'd consider required reading for anyone who wants to understand the problems raised by ICANN's proposal-which might seems very attractive on its face. After all, having "more choices" is something we'd all generally agree with.
The comments of corporate registrar MarkMonitor (endorsed by over seventy global corporate giants such as 3M, Costco, eBay, FedEx, Nike, Goodyear, Verizon and Viacom) provide an excellent summary of important points raised that were common threads in many of the other submissions, including:
The comments of AT&T offered detailed recommendations for improving ICANN's proposal, including:
International Concern
While U.S.-based businesses (e.g., Adobe, TimeWarner, eBay, HP and ITT) were strongly represented among the comments, a substantial number of non-U.S. businesses and organizations also submitted comments expressing their concerns about ICANN's draft proposal including the BBC, economiesuisse ( the largest umbrella organization representing the Swiss economy), and MARQUES (the European Association of Trade Mark Owners).
Financial Sector Concern
The financial services sector has traditionally not been a very active on ICANN policy matters except those related to the WHOIS domain-look up service. But this sector expressed its concerns about the new TLD process-especially concerning the possibility that banking or finance related gTLDs (such as .bank) might be created without necessary safeguards. See the comments of GE Money, Bank of America, Securities Industry and Financial Markets Association, Visa, the American Bankers Association, and FDIC.
What's Next?
The ball is clearly in ICANN's court, as both the private and public sector wait anxiously for ICANN's next steps. ICANN has planned to release a revised Draft Applicant Guidebook sometime in late February (shortly before the next ICANN regional meeting in March in Mexico City). But at a minimum, ICANN owes both the global business community and governments a detailed response to the many concerns raised about its proposal. ICANN's existing public forum format offers an excellent vehicle for ICANN to engage affected parties constructively. Let us hope that ICANN takes advantage of this opportunity to discuss the October draft proposal at the Mexico City meeting in March-before issuing yet another draft.
But more fundamentally, it is difficult to see how the ICANN Board can adopt any new gTLD process and claim bottom-up consensus unless substantial and substantive modifications are made to the October Draft Applicant Guidebook. In advance of the March ICANN regional meeting, I will be working with the staff of The Progress & Freedom Foundation as an Adjunct Fellow to develop a number of changes that address the serious concerns expressed about ICANN's proposal.
The stakes in the discussion are high. The second letter in the USG's comments, from DOJ's Antitrust Division to NTIA, raised a number of concerns about the competitive dynamics of the gTLD marketplace, and declared that "ICANN has not come close to fulfilling its obligations to employ competitive principles in its management of TLD registry obligations." While there has been growing international demand for the USG to set ICANN free of its oversight, the rather pointed analysis from the DOJ regarding the inadequacy of ICANN process to date on this critical mission objective raises serious questions about whether a extension/renegotiation of the Joint Project Agreement currently set to expire in 2009 is warranted.
ICANN has a lot of work to do between now and September.