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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.

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.

Nokia considers new TLD application

Kevin Murphy, August 31, 2010, Domain Registries

Is Nokia planning to add its name to the list of “.brand” new top-level domain applicants?

That’s the intriguing possibility that emerged during a conference call of ICANN’s vertical integration working group yesterday.

Nokia working group representative Tero Mustala said, “our company is considering the possibilities to apply for a new gTLD”.

The revelation came as one of the disclosure statements that each participant was obliged to make, and should probably not be taken as an official company position.

As far as I know, this is the first time that the mobile phone giant has been connected to a new TLD bid. But is it a .brand? Unknown.

Nokia is an old hand at TLD applications, being among the over a dozen companies that financed the successful .mobi sponsored TLD application back in 2005.

In the 2000 “test-bed” round, it applied for .mas, .max, .mid, .mis, .mobi, .mobile, .now and .own but failed on technological grounds.

Under the new TLD application process, unsuccessful 2000 applicants get an $86,000 credit towards their new application, if they apply for the same string(s). That’s not an amount of money Nokia would care too much about, obviously.

There have been very few publicly disclosed .brand applications. Canon was the first and loudest. A couple of other companies, such as IBM, have been dropping hints.

New TLD ownership rules punted to ICANN board

Kevin Murphy, August 16, 2010, Domain Policy

The ICANN board will be asked to untangle the policy mess that currently bans domain name registrars from applying for new top-level domains, after a GNSO working group failed to reach consensus.

The Vertical Integration WG was tasked with figuring out whether registrars should be allowed to own new TLD registries and vice versa, but only managed to reach deadlock.

The GNSO Council is now likely to punt the issue to the ICANN’s September 24-25 retreat, asking the board to consider the issues raised by the WG’s non-committal interim report.

It’s a dismaying case of pass-the-parcel that highlights both the trickiness of the VI problem and the limits of ICANN’s bottom-up policy-making process.

ICANN’s Draft Applicant Guidebook currently says that cross ownership between registrars and new TLD registries should be limited to 2% and that all new TLDs need to be offered to all accredited registrars.

This was in response to fears from some quarters that if a registrar also owned a new TLD registry, it would have an unfair advantage over other registrars, ultimately harming registrants.

The DAGv4 text was an overt, deliberately Draconian placeholder – it would ban all registrars and some registries, as well as making “.brand” TLDs unworkable – designed to force the GNSO find a better solution to the perceived problem.

The WG, which is ongoing, has so far failed to do so, and now seems set to pass the hot potato back from whence it came.

What all this means is that the ICANN board (and, let’s face it, staff) will be forced to assemble a workable VI policy for the first round of new TLD applications from the piecemeal suggestions of the WG; to do over two days or less what the WG failed to do over six months.

What the board will decide remains to be seen, but it could wind up governing the first round of new TLD applications, potentially making it a considerably smaller round.

Stalemate reached on new TLD ownership rules

Kevin Murphy, July 26, 2010, Domain Policy

An ICANN working group tasked with deciding whether domain name registrars should be able to apply to run new top-level domains has failed to reach a consensus.

For the last several months, the Vertical Integration working group has been debating, in essence, the competitive ground rules of the new TLD market, addressing questions such as:

  • Should existing ICANN registrars be allowed to run new TLD registries?
  • Should new TLD registries be allowed to own and control ICANN registrars?
  • Should new TLD registries be allowed to sell domains directly to end users?
  • What if an approved registry can’t find a decent registrar willing to sell domains in its TLD?
  • Should “.brand” TLDs be forced to sell via ICANN accredited registrars?
  • Should “registry service providers” be subject to the same restrictions as “registries”?
  • Where’s the harm in allowing cross-ownership and vertical integration?

It’s an extraordinarily complex set of questions, so it’s perhaps not surprising that the working group, which comprised a whopping 75 people, has managed to reach agreement on very few answers.

Its initial report, described as a “snapshot” and subject to change, states:

It is impossible to know or completely understand all potential business models that may be represented by new gTLD applicants. That fact has been an obstacle to finding consensus on policy that defines clear, bright line rules for allowing vertical integration and a compliance framework to support it

Having lurked on the WG’s interactions for a few months, I should note that this is possibly the understatement of the year. However, the WG does draw four conclusions.

1. Certain new gTLDs likely to be applied for in the first round will be unnecessarily impacted by restrictions on cross-ownership or control between registrar and registry.

I believe the WG is referring here primarily to, for example, certain “cultural” TLDs that expect to operate in linguistic niches not currently catered for by registrars.

The operators of the .zulu and .kurd TLDs would certainly find themselves without a paddle if the rules obliged them to find an ICANN-accredited registrar that supports either of their languages.

There are other would-be registries, such as .music, that call themselves “community” TLDs and want to be able to sell directly to users, but my feeling is that many in the WG are less sympathetic to those causes.

2. The need for a process that would allow applicants to request exceptions and be considered on a case-by-case basis. The reasons for exceptions, and the conditions under which exceptions would be allowed, vary widely in the group.

There’s not a great deal to add to that: the WG spent much of the last couple of weeks arguing about “exceptions” (that they could not agree on) to a baseline rule (that they could not define).

3. The concept of Single Registrant Single User should be explored further.

An “SRSU” is a subset of what a lot of us have been calling a “.brand”. The proposed .canon TLD, under which Canon alone owns .canon domains, would likely fall into this category.

The WG’s report suggests that SRSU namespaces, should they be permitted, should not be subject to the same restrictions as a more open and generic TLD that sells to the average man on the street.

The alternative would be pretty crazy – imagine Canon owning the registry but being forced to pay Go Daddy or eNom every time it wanted to add a record to its own database.

I do not believe that a hypothetical .facebook, in which Facebook is the registry and its users are the registrants, falls into the SRSU category. Which is also pretty nuts, if you’re Facebook, forced to hand your brand over to the world’s domain name registrars.

4. The need for enhanced compliance efforts and the need for a detailed compliance plan in relation to the new gTLD program in general.

One principle that has come through quite clearly whilst lurking on the WG mailing list is that the degree of distrust between participants in this industry is matched only by the lack of confidence in ICANN’s ability to police bad actors effectively.

Domain name companies are masters of the loophole, and ICANN’s enforcement mechanisms have historically been slow enough that yesterday’s scandal often becomes today’s standard practice.

This sums it up pretty well:

Some members feel that loosening vertical integration/ownership controls may let the proverbial “genie out of the bottle that can’t be put back” should competitive harms result in the marketplace. Others believe that adopting restrictions on vertical integration or cross ownership is the wrong approach altogether, and that the focus should be on protecting against harms, and providing sanctions where harms take place.

The WG currently has six policy proposals on the table, which vary from the “no VI allowed” of the current Draft Applicant Guidebook to “some VI allowed” to “full VI allowed”.

There was a poll of WG members a few weeks back, to see which proposal had most support. It was inconclusive, but it left three proposals clearly in the lead.

The so-called Free Trade proposal, which advocates no limits on cross ownership, was originally authored by Sivasubramanian Muthusamy of ISOC India Chennai.

The proposal as it currently stands puts the focus on ICANN troubleshooting undesirable activities through compliance programs rather than ownership restrictions.

Opposed, a proposal known as RACK+, offered up primarily by Afilias, some of its partners, and Go Daddy, favours a much more restrictive policy that is more aligned with business models established under the last ten years of gTLDs dominated by .com.

RACK+ would impose a 15% ownership limit between registries, registrars and registry service operators, ostensibly in order to prevent registrars abusing privileged registry data.

But under RACK+, all TLDs, including .brands and obscure community TLDs, would be obliged to accept registrations only through ICANN registrars, on a non-discriminatory basis.

This would probably render the .brand TLD market stillborn, if adopted by ICANN, I reckon.

A third proposal, called JN2+, originally authored by representatives of NeuStar and Domain Dimensions, occupies a spot somewhere in the middle ground.

It also proposes 15% ownership caps between registrars, registries and registry service providers, but it contains explicit carve-outs for SRSU-style .brands and “community” TLDs.

Because I’m a wimp, and I have no desire to be drawn into the kinds of arguments I’ve been reading and listening to recently, I’m going to quote Milton Mueller here, saying JN2 “had the highest acceptability ranking of all the proposals” when the WG was polled.

(Sorry.)

I find it rather surprising that the WG seems to be calling for more policy work to be done on ICANN’s compliance programs before the issue of vertical integration can be fully resolved.

If anything, this seems to me to be yet another way to risk adding more delay to the new TLD program.

There’s a public comment period now open, here. And here’s the report itself (pdf)