Trojan TLDs to get more scrutiny

ICANN has proposed a new policy for its new top-level domain program that would make it harder for community-based TLDs to liberalize their registration policies after they launch.
The idea is to prevent a replay of the recent .jobs controversy, in which registry Employ Media substantially altered its business model after failing to sell enough .jobs domains.
Because the Applicant Guidebook gives “community” TLD applications an opportunity to avoid a potentially costly auction if their TLD is contested by multiple applicants, there’s a risk of gaming.
Under the current rules, a company could win a contested TLD without paying big bucks, by promising to restrict it to a narrowly defined community of registrants.
It could later attempt to change its rules via ICANN’s Registry Services Evaluation Process to broaden or limit its potential customer base, potentially harming others in the community.
I call these Trojan TLDs.
Employ Media, for example, restricted .jobs domains to the names of companies, but now has licensed thousands of geographical and vocational generic names to a partner, over the objections of major jobs search engines such as Monster.com.
Under ICANN’s proposed policies (pdf), community TLDs would still have to pass through the RSEP, but they’d also be subject to a review under the Community Priority Evaluation.
The CPE is already in the Guidebook. It will be used to score applications based on the strength of community support. To avoid an auction, you need to score 14 out of 16 points.
ICANN now suggests that the CPE criteria could also be used to evaluate what it calls a “Community gTLD Change proposal” made by a TLD registry post-launch.
The new score would be used to determine whether to accept or reject the change:

If the sum of all identified score changes for the first three CPE criteria is zero or positive, the recommendation would be to accept the proposal, regardless of any relevant opposition identified. If the sum is minus one, the recommendation would be to accept the proposal, unless there is relevant opposition from a group of non-negligible size, in which case the recommendation would be to reject the proposal. If the sum is minus two or lower, the recommendation would be to reject the proposal.

The ICANN board would be able to deviate from the CPE recommendation, as long as it stated its reasons for doing so, and the registry would have the right to appeal that decision under the existing Reconsideration Request process.
These rules would apply to all new TLDs that designate themselves as community-based, apparently regardless of whether they successfully passed the CPE during the application process.
The rules are presented as a “discussion draft”, but I don’t think they’re going to be opened to official public comment.

ICANN names date for Applicant Guidebook

ICANN has put a tentative date on the release of its Applicant Guidebook for new top-level domains.
In publishing its summary and analysis of the proposed final version of the AGB today, ICANN also issued this timetable:

Expected Path Forward
* Board-GAC Consultations: 28 Feb – 1 Mar 2011
* ICANN meeting: 14 – 18 Mar 2011
* Release of Applicant Guidebook: 14 Apr 2011

Note that it says “release”, not “approval”.
The nearest scheduled ICANN board of directors meeting to the release date is April 21.

ICANN prepares for trademark fight with GAC

ICANN thinks the benefits of new top-level domains will outweigh the costs, and it preparing for a scrap when it meets its Governmental Advisory Committee in Brussels next week.
In a number of briefing documents published yesterday, ICANN makes it clear that it does not think the new TLD program will create a huge economic burden on trademark holders.
Brussels is possibly the final major hoop ICANN has to jump through before its board of directors will be able to sign off the Applicant Guidebook and start accepting new TLD applications.
There are a number of areas where the GAC and ICANN disagree. Next week’s meeting is intended to identify those differences, and to try to find ways to resolve them.
The GAC’s biggest problem with the new TLD program, as its members made clear in Cartagena and subsequently, is that it’s not convinced new TLDs won’t cost brand holders a bundle.
What will be the damage caused by cybersquatting? How much money will big business be forced to spend on defensive registrations?
Nobody knows for sure, and none of the independent third-party economic reports commissioned by ICANN ventures anywhere near a comprehensive empirical study.
So the GAC wants another economic study done, to quantify the costs and benefits of new TLDs, and to figure out how voluminous defensive registrations is likely to be.
ICANN disagrees, saying essentially that more studies are pointless, and that demand for defensive registrations in new TLDs are likely to be low.

The Board position is that defensive registrations will increase but not in numbers projected by some trademark holders

Estimates from the Coalition Against Domain Name Abuse, CADNA, last year put the cost to brands of the new TLD program at $746 million. But ICANN isn’t buying that:

The Board also believes that economic studies do not provide evidence that new TLDs will result in demand for defensive registrations. Existing independent studies, that the Board is seeking to validate, indicate that defensive registrations occur only in the very largest, well-established registries only.
…
the Board is seeking (and will publish) independent corroboration that:
• trademark holders generally do not register their trademarks in all the current generic TLDs.
• Therefore, it is not expected that trademark owners, in general, register their trademarks in new gTLDs, and
• due to the expected costs to run a registry and the expected low number of defensive domain name registrations, there is no economic incentive for an applicant to obtain a TLD for the sole purpose of making money from defensive trademark registrations.

ICANN does not identify these “independent studies”, but the data points cited in the document (pdf) point to a February 2009 article published on CircleID by Paul Stahura, and a comment made on that article by Richard Tindal that cites third-party data.
The Stahura report is arguably the most comprehensive carried out on defensive registrations in existing open gTLDs, concluding that the current cost to trademark holders is very low indeed, and that the bulk of typosquatting and trademark enforcement goes on in .com.
The research suggested that each new TLD would create costs in the tens of thousands of dollars per year, across the whole universe of trademark interests. It used baseline registrar fees in its calculations, unlike the CADNA report, which used sunrise fees about a hundred times greater.
But the Stahura study is “independent” only in the respect that it was not commissioned by ICANN or carried out with its blessing or participation.
At the time it was published, Stahura was president of eNom owner Demand Media, which is expected to be a new TLD applicant. Tindal, apparently also cited in ICANN’s latest report, was senior vice president, registry, for Demand Media.
Independently validating the report’s conclusions will be important, if only to avoid accusations that ICANN is making its decisions based on the views of those who would benefit from new TLDs.
Another of ICANN’s newly published briefing documents (pdf) also address the specific trademark protection mechanisms called for in the Applicant Guidebook.
The GAC has not yet published, or provided ICANN with, its specific recommendations relating to these mechanisms (I understand that will come in the next day or two) but they are expected to call for a tightening of the rules governing the Trademark Clearinghouse and Uniform Rapid Suspension policy.
Unlike several parts of yesterday’s briefing papers, ICANN’s language when discussing these two mechanisms does not suggest to me that it is preparing to substantially compromise.
With trademarks just one of many issues under discussion, Brussels is shaping up to becoming very interesting indeed.

ICANN confirms TLD delays after sponsorship closes

ICANN has officially confirmed that it does not intend to launch the new top-level domains program at its meeting in San Francisco next month.
The news came just one day after the organization stopped accepting sponsorship deals, at the new controversially higher rate, for the meeting.
In a blog post, ICANN’s Jamie Hedlund said that a vote on the new TLD program would not be possible due to the upcoming consultation with the Government Advisory Committee in Brussels.
He wrote:

In addition to the Brussels consultation, the bylaws-defined consultation will take place on 17 March, the day before the Silicon Valley–San Francisco Board Meeting. Because of the timing of the bylaws consultation, the Board will not approve or announce the new gTLD program at that Board Meeting.

Now, the timing of this announcement could just be a coincidence, it could be related to ICANN’s fast-approaching deadline for publishing meeting documents, but the fact that it came the day after the sponsorship deadline for SF passed raised an eyebrow chez DI.
ICANN has known about the timing of the GAC consultation since at least January 25, when its board of directors approved the March 17 schedule.
Chairman Peter Dengate Thrush was quoted as saying new TLDs were likely off the menu for SF as early as February 3, and senior vice president Kurt Pritz echoed that view a week ago.
With March 18 no longer a possibility for the Applicant Guidebook getting approved, what does that mean for the new TLDs timetable?
Some observers believe that we’ll have to wait for the ICANN meeting in Amman, Jordan, in June, which could see the first-round application window open in October.
I’m not convinced we’ll have to wait that long. It seems possible that ICANN will eschew the fanfare of a public meeting and approve the final draft of the Guidebook over the phone whenever it’s ready.
The first new TLDs are expected to go live on the internet approximately 15 months after the Guidebook gets the nod.

My highlights from .nxt

The jetlag has finally worn off, and I’ve had a few days to cogitate, so I thought I’d share some of my personal highlights of the .nxt conference last week.
In no particular order, these are the things that put a smile on my face:
Kieren McCarthy’s opening speech. The analogy he drew between the introduction of new top-level domains and the building of San Francisco’s bridges was either divinely inspired or Satanically tortured. Either way, it worked. Nice bit of writing.
Meeting a genuine outsider. It’s rare I get to meet anybody at this type of meeting who’s not already familiar with ICANN and the domain market, but I did at .nxt. Dude gave me a fake name and said he’d showed up primarily to see if his competitors were there, ahead of a possible TLD bid. When I asked him what information would make his life easier, he said “help with the acronyms”. Figures.
The “Reality Check” session. I took six pages of notes, so I must have found it informative.
Juan Diego Calle’s keynote. He may not be the world’s greatest public speaker, but Calle’s speech, which talked the crowd through .co’s pretty smart marketing strategy, was good content.
John Berryhill’s panels. Everybody bangs on about how funny this guy is, but the .nxt panels he moderated really gave him a platform to exercise his wit. He’s good value, but I feel certain that if I ever let him represent me in court we’d both find ourselves banged up on contempt charges.
San Francisco. I lived there for eight years, and last week was my first time back there since 2007. Great to visit the old haunts. Beautiful weather, too, for this time of year.
Free candy. Great big bowls of the stuff were laid out after the closing session. Nice touch.
Me. Virtually everybody I met for the first time was already a DI reader, which was hugely gratifying. The notable exception was a certain ICANN staffer, who’d never heard of the site. That’s fair enough, I suppose – it’s not like I cover ICANN much.
Overall, I had a great few days at .nxt, and I look forward to the next one.

VeriSign’s upcoming battle for the Chinese .com

Could VeriSign be about to face off against China for control of the Chinese version of .com? That’s an intriguing possibility that was raised during the .nxt conference last week.
Almost as an aside, auDA chief Chris Disspain mentioned during a session that he believes there are moves afoot in China to apply to ICANN for “company”, “network” and “organization” in Chinese characters. In other words, .com, .net and .org.
I’ve been unable to find an official announcement of any such Chinese application, but I’m reliably informed that Noises Have Been Made.
VeriSign has for several quarters been open about its plans to apply for IDN equivalents of its two flagship TLDs, and PIR’s new CEO Brian Cute recently told me he wants to do the same for .org.
While neither company has specified which scripts they’re looking at, Chinese is a no-brainer. As of this week, the nation is the world’s second-largest economy, and easily its most populous.
Since we’re already speculating, let’s speculate some more: who would win the Chinese .com under ICANN’s application rules, VeriSign or China?
If the two strings were close enough to wind up in a contention set, could VeriSign claim intellectual property rights, on the basis of its .com business? It seems like a stretch.
Could China leapfrog to the end of the process with a community application and a demand for a Community Priority Evaluation?
That also seems like a stretch. It’s not impossible – there’s arguably a “community” of companies registered with the Chinese government – but such a move would likely stink of gaming.
Is there a technical stability argument to be made? Is 公司. (which Google tells me means “company” in Chinese) confusingly similar to .com?
If these TLDs went to auction, one thing is certain: there are few potential applicants with deeper pockets than VeriSign, but China is one of them.
UPDATE: VeriSign’s Pat Kane was good enough to post a lengthy explanation of the company’s IDN strategy in the comments.

Dot Africa needs a registry

DotConnectAfrica, one of the organizations planning to apply to ICANN to run .africa as a new top-level domain, has put out its feelers for a technical back-end partner.
In a press release, DCA today solicited expressions of interest from registry services providers. “Presence and/or experience in developing markets” is said to be “preferred but not a must”.
I expect there will be quite a few EOIs winging their way to the company in the next few days.
The whole of Africa only has about 110 million internet users currently. But with only 11% penetration, there’s pretty good growth potential. And chances are there’s not a great deal of ccTLD lock-in yet.
The nearest equivalent existing TLD is .asia, which has about 185,000 active registrations.
That’s less than half as many as .asia had post-landrush, but still represents a nice chunk of change for a back-end provider that does not have to pony up the cash for marketing.
DCA is one of two organizations known to be pursuing a .africa bid, and easily the highest-profile of the two. The other is called Dot Africa.
As a geographical name protected by ICANN’s new TLDs Applicant Guidebook, .africa will only be awarded to an applicant with proven governmental support.
That likely means that it will be the African Union, not ICANN, that ultimately decides the winner. In this slide deck, DCA says it has support from the AU and from 20% of African governments.

Why ICANN dropped registrar ownership rules

ICANN has quietly published a list of 10 reasons explaining why it decided to start allowing domain name registrars and registries to buy each other.
Last November, ICANN’s board of directors voted to drop so-called “vertical integration” rules that previously prevented registries owning more than a small percentage of registrars.
Now, under the forthcoming new top-level domains program, the likes of eNom and Go Daddy will be able to apply to become gTLD registries, and registries like VeriSign and Neustar will be able to apply to run their own registrar businesses.
The decision was unexpected, appeared to be a U-turn, and ICANN’s explanation was not articulated sufficiently to sate critics such as the US Department of Commerce.
So now ICANN has published a “Draft Rationale” (pdf), a 17-page document that outlines some of the thinking that went into the decision.
In a nutshell, ICANN dropped the VI rules to increase competition, to avoid antitrust lawsuits, and because the harms that could arise due to cross-ownership are best addressed by other means.
Here are the rationale’s 10 major bullet points in full:

• None of the proposals submitted by the GNSO reflect a consensus opinion; as a result, the Board supported a model based on its own factual investigation, expert analysis, and concerns expressed by stakeholders and the community.
• ICANN’s position and mission must be focused on creating more competition as opposed to having rules that restrict competition and innovation.
• Rules permitting cross-ownership foster greater diversity in business models and enhance opportunities offered by new TLDs.
• Rules prohibiting cross-ownership require more enforcement and can easily be circumvented.
• Rules permitting cross-ownership enhance efficiencies and almost certainly will result in benefits to consumers in the form of lower prices and enhanced services.
• Preventing cross-ownership would create more exposure to ICANN of lawsuits, including antitrust lawsuits, which are costly to defend even if ICANN believes (as it does) that it has no proper exposure in such litigation.
• The new Code of Conduct, which is to be part of the base agreement for all new gTLDs, includes adequate protections designed to address behavior the Board wants to discourage, including abuses of data and market power. Data protection is best accomplished by data protection tools, including audits, contractual penalties such as contract termination, punitive damages, and costs of enforcement, as well as strong enforcement of rules. By contrast, market construction rules can be circumvented and cause other harms.
• Case-by-case re-negotiation of existing contracts to reflect the new crossownership rules will permit ICANN to address the risk of abuse of market power contractually.
• In the event ICANN has competition concerns, ICANN will have the ability to refer those concerns to relevant antitrust authorities.
• ICANN can amend contracts to address harms that may arise as a direct or indirect result of the new cross-ownership rules.

The document still needs to be approved by the ICANN board of directors before it can be considered official.
It appeared without fanfare on the ICANN web site a little over a week ago.

Afilias lawyers up for TLD applicants

Registry services provider Afilias has expanded its relationship with the law firm Crowell & Moring to support prospective new top-level domain applicants.
The two companies said this morning that they have entered into a memorandum of understanding under which Crowell will provide legal and business consultation to Afilias’s new TLD clients.
Afilias, along with VeriSign and Neustar, is expected to one of the major beneficiaries of the introduction of new TLDs, due to its experience managing the technical back-end for several existing TLDs.
Here at the .nxt conference in San Francisco this week, one oft-repeated message is that applicants can smooth their TLD application with ICANN by signing up an incumbent to provide the back-end.
Crowell is one of a small number of law firms with a specialist domain name consulting arm. It is affiliated with the IP Clearinghouse, which wants to play a key role in new TLD launches.

Neustar wins .gay contract

Neustrar has signed a deal to provide back-end registry services to DotGay LLC, one of the companies hoping to apply for .gay as a new top-level domain.
There are currently two companies planning to apply for .gay that I’m aware of. The other, the Dot Gay Alliance, has chosen Minds + Machines as its back-end partner.
The positioning is quite interesting. Scott Seitz, CEO of DotGay, played up the need for more security and stability in a TLD that may find itself the target of homophobic cyber-attacks.
In a press release due out tomorrow, Seitz says:

While security is always a concern for any gTLD, the GLBT community is at a higher risk of discrimination, making system integrity a critical component in the selection of a registry partner.

Neustar, which runs .biz and several other TLDs, has more experience running high-traffic registries than M+M. However, this fact will likely not be relevant to which company wins .gay.
Under the ICANN new TLDs program, applicants have to prove themselves capable of running a registry, but contested TLD applicants are not compared against each other based on technical prowess.
It’s much more likely that the two (or more) .gay applications will live or die based on community support or, failing that, how much money they are prepared to pay at auction.
The .gay TLD is likely to also be a flashpoint for controversy due to ongoing debates about governments’ ability to block TLDs based on “morality and public order” objections.
Recent mainstream media coverage has focused on .gay as a likely test case for governmental veto powers.