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New TLD competition group throws in the towel

Kevin Murphy, September 29, 2010, Domain Registries

The ICANN working group tasked with deciding whether registrars should be allowed to apply for new top-level domains has failed to reach agreement after over six months of talks.

This means it will be down to the ICANN board of directors to decide, possibly at its next meeting, what the rules should be on vertical integration and cross ownership in new TLDs.

It’s been pretty clear from the Vertical Integration Working Group’s recent discussions that there would be no chance of the group reaching a consensus on the headline topics in the remaining time allotted to it.

Within the last two hours, the GNSO Council has been notified that the group has failed to reach consensus.

Should ICANN-accredited registrars be allowed to apply for new TLDs? Should registries be allow to sell direct to consumers? Should registrars be able to own stakes in registries? Vice versa? How much? Whither the .brand?

All these questions will now have to be resolved by the ICANN staff and board.

Currently, the Draft Applicant Guidebook limits registry/registrar cross-ownership to 2%, effectively barring existing registrars from applying to run new TLD registries.

While the VI working group has been working on the problem since February, positions quickly became entrenched based on the commercial interests of many participants. There has been no substantial progress towards compromise or consensus in months.

But the group did manage to reach rough agreement on a number of peripheral problems that will have a lesser economic impact on the incumbent registries and registrars.

For example, the board will likely be told that “single registrant, single user” TLDs, a variant of the .brand where the registry is the only registrant, should be looked into further.

On the core issue of cross ownership, three proposals are on the table.

One, the Free Trade Proposal, would eliminate such restrictions entirely. Two others, RACK+ and JN2+, would increase the limits to 15%.

The RACK+ proposal is the closest to the status quo in terms of barring vertical integration, while JN2+ contains explicit exceptions for .brand TLDs and smaller community registries.

Given the lack of consensus, it’s quite feasible that the ICANN board may decide to cherry pick from two or more proposals, or come up with something entirely novel. We’ll have to wait and see.

New TLDs get their own conference

Kevin Murphy, September 28, 2010, Domain Registries

Former ICANN staffer Kieren McCarthy is organizing a conference dedicated to new top-level domains, set to run in San Francisco for two days next February.

The .nxt conference will be hosted by the Internet Society’s SF Bay Area chapter. Pricing is expected to be in the $300 to $500 range.

The organizers are currently looking for speakers, exhibitors and attendees from registries, registrars, potential TLD applicants, consultants and marketers.

McCarthy told me that the idea is to focus more on the business opportunity side of things, rather than the policy-making that dominates ICANN meetings.

“Once all the argument is over and the rules are set, I thought it would be great to have a conference focused on what we were all going to do with the Internet,” he said in an email.

The agenda is expected to be split into four tracks: policy, implementation, models and marketing, tackling subjects such as how to run a registry and how to effectively market a TLD.

Saudi IDN landrush begins

Kevin Murphy, September 28, 2010, Domain Registries

SaudiNIC has kicked off the landrush phase for its recently approved Arabic-script country-code top-level domain, السعودية.

The registry is using the term “landrush” to describe what other registries would call general availability. As of yesterday, it’s first-come-first-served.

Registrants must be Saudi citizens or owners of Saudi trademarks, and the registration process requires the necessary documents to be filed. It’s Arabic-script only.

There won’t be much of an aftermarket; flipping domains is frowned upon and each registrant has to show a “reasonable relationship” to the domain they want to register.

UPDATE: I’ve been told that the launch may have been delayed, which I am attempting to confirm. The registry web site is still announcing yesterday as the launch date.

ICANN to publish final new TLD rulebook before December

Kevin Murphy, September 26, 2010, Domain Registries

The ICANN board of directors said it will publish the final Applicant Guidebook for new top-level domains before the public meeting in Cartagena this December.

(UPDATE: that statement is not 100% accurate. See this post for an update.)

The decision came at the end of its two-day retreat in Trondheim, Norway yesterday, which seems to have left a number of important issues as yet unresolved.

The matters of registry-registrar cross ownership and morality and public order objections are both still unfinished business, while the intellectual property lobby has at least one bone thrown its way.

On the morality or “MOPO” problem, now known as the “Rec6” problem, the board had this to say:

The Board will accept the Rec6 CWG recommendations that are not inconsistent with the existing process, as this can be achieved before the opening of the first gTLD application round, and will work to resolve any inconsistencies.

The Rec6 working group had recommended a re-framing of the issue that would eliminate the possibility of any one government blocking a new TLD application based on its own laws and interests.

So the board resolution sounds like progress, until you realize that every decision on new TLDs made at the retreat is going to be re-evaluated in light of a shamefully eleventh hour wish-list submitted by the Governmental Advisory Committee on Thursday.

Having failed to get what it wanted through cooperation with the Rec6 working group, the GAC essentially went over the heads of the GNSO, taking its demands directly to the board.

So much for bottom-up policy making.

Resolved (2010.09.25.02), staff is directed to determine if the directions indicated by the Board below are consistent with GAC comments, and recommend any appropriate further action in light of the GAC’s comments.

In other words, the board may only accept the parts of the Rec6 recommendations that the GAC agrees with, and the GAC, judging from its latest missive, wants the first round of applications limited to purely “non-controversial” strings, whatever those may be.

The board also made no firm decision of the issue of registry vertical integration and cross-ownership. This is the entirety of what it said on VI:

The Board will send a letter to the GNSO requesting that the GNSO send to the Board, by no later than 8 October 2010, a letter (a) indicating that no consensus on vertical integration issues has been reached to date, or (b) indicating its documented consensus position. If no response is received by 8 October 2010, then the Board will deem lack of consensus and make determinations around these issues as necessary. At the time a policy conclusion is reached by the GNSO, it can be included in the applicant guidebook for future application rounds.

That’s actually borderline amusing, given that the GNSO working group on VI has recently been waiting for hints from the board about what it intends to do, rather than actually getting on with the job of attempting to create a consensus policy.

The bone I mentioned for the trademark crowd amounts to knocking a week off the length of time it takes to resolve a complaint under the Uniform Rapid Suspension policy.

The Trondheim resolutions also make it clear that the ICANN board will only be required to vote on a new TLD application in limited circumstances, such as when an objection is filed.

For all other applications, a staff mechanism for rapidly signing contracts and adding TLDs to the root will be created.

Crunch day for new TLDs

Kevin Murphy, September 24, 2010, Domain Registries

The ICANN board has kicked off a two-day retreat during which it will attempt to finalize the rules for applying for new top-level domains.

The big question for many is this: are more delays or the cards, or will ICANN finally put a firm timeline on the first new TLD application round?

One constituency that seems bent on more delays is the intellectual property community.

Dozens of organizations, including Microsoft, AT&T, Time Warner, Adobe and Coca-Cola, told ICANN in late July that the current IP protections in version 4 of the Draft Applicant Guidebook are not good enough.

The proposed Uniform Rapid Suspension process has become bloated and burdensome and the Trademark Clearinghouse does not go far enough to proactively protect trademarks, they say.

Just this week, it emerged that the International Trademark Association has called for further studies into the potential economic harms of new TLDs, which could easily add a couple of quarters of delay.

But there are good reasons to believe ICANN is done with being pushed around by IP interests.

As I reported earlier this week, chairman Peter Dengate Thrush has recently publicly stated that the current state of intellectual property protection in the DAG is a compromise position reflecting the views of all stakeholders and that IP lawyers “have had their chance”.

It’s not just IP interests that will be affected by the ICANN board’s discussions this weekend. The board’s decisions on “vertical integration” will make or break business models.

The VI issue, which governs whether registrars can apply for new TLDs and whether registrars can act as registrars, is perhaps the most difficult problem in the DAG. The working group tasked with sorting it out failed to reach consensus after six months of debate.

The DAGv4 currently says, as an explicit placeholder, that there can be no more than 2% cross-ownership of a registry by a registrar and vice versa.

This would mean that registrars that want to get into the TLD game, such as Demand Media’s eNom, would not be allowed to apply.

It may also cause problems for publicly listed registries such as VeriSign and Neustar, or registries that already have registrar shareholders, such as Afilias.

The proposals on the table include raising the ownership cap to 15% to eliminating it altogether.

A move by ICANN to restrict ownership will certainly attract allegations of anti-competitive behavior by those companies excluded, while a move too far in the opposite direction could lead to accusations that the rules do not go far enough to protect registrants.

There are no correct answers to this problem. ICANN needs to find a balance that does the least harm.

Also up for debate will be the rules on how governments and others can object to new TLD applications on “morality and public order” grounds.

Following the report of a working group, which I blogged about here, it seems likely that the term “morality and public order” will be replaced entirely, probably by “Objections Based on General Principles of International Law”.

If the board adopts the recommendations of this “Rec6” working group, there will be no special provision in the Guidebook for governments to make objections based on their own national laws.

There’s also the suggestion that ICANN’s board should have to vote with a two-thirds super-majority in order to deny a TLD application based on Rec6 objections.

It’s another almost impossible problem. Some say the Rec6 recommendations as they currently stand are unlikely to appease members of the Governmental Advisory Committee.

In summary, ICANN’s board has just two days to define the competitive parameters of a market that could be worth billions, figure out how to politely tell some of the world’s largest IP rights holders to back off, and write the rule-book on international governmental influence in the new TLD process.

I predict a small boom in sales of coffee and pizza in the Trondheim region.