Clash over new gTLD risk fund

The ICANN community is split along predictable lines – domain registries versus intellectual property interests – in the latest controversy to hit the new top-level domains policy-making.
ICANN’s board of directors will meet this week to decide the fate of its new gTLD failure risk fund, an expensive buffer designed to protect registrants if new gTLD registries go bust.
The current plan is to ask each new gTLD applicant to front the entire cost of three years’ operation with a Continuing Operations Instrument – either a letter of credit or cash in escrow.
The idea is that if they go out of business, funds will be available to pay an emergency registry operator to, in the worst case scenario, gracefully wind down the gTLD.
Registries and some potential applicants are not happy about this idea. They say that the COI imposes too great a cost on start-up registries, which could lead to more failed businesses.
Since smaller businesses may not be able to secure letters of credit, they’ll have to escrow hundreds of thousands of dollars, rather than using the money to make sure they don’t fail in the first place.
Registries have proposed an alternative – a Continued Operations Fund – which would see all applicants deposit a flat fee of $50,000 into a central risk pool that ICANN would manage.
An ICANN public comment period on the COF that closed on Friday revealed the anticipated level of opposition from business and IP interests.
The main concern is that the COF represents a transfer of wealth from rich companies, which would easily and cheaply qualify for a letter of credit, to less well-funded applicants.
The COF “seeks to subsidize certain registry operators instead of allowing the market itself (via letter of credit based upon applicant viability) to determine the level of risk for each applicant”, Claudio DiGangi of the International Trademark Association wrote.
Steve Metalitz, president of ICANN’s Intellectual Property Constituency, echoed INTA’s concerns, adding the IPC’s suspicions about why the COF has been proposed:

[The COF] allows more underfunded applicants into the application pool which will in turn lead to more registry failures, cost to ICANN, and poor outcomes for registrants. While this may be good in the short term for members of the Registry Stakeholder Group (RySG) who desire to provide backend services to such underfunded applicants, the short term economic gain of members of one SG should not be prioritized over the risks to registrants and ICANN that the COF represents

One member of the IPC has suggested that if ICANN were to introduce a COF now, it would give opponents of the new gTLD program grounds to sue, under California insurance law, to put it to a halt.
On the pro-COF side, .org manger the Public Interest Registry said that the current COI plan discourages companies for applying for new gTLDs, which is at odds with ICANN’s goals of increasing competition in the registry space.
PIR’s director of policy Paul Diaz also points out that letters of credit will be hard to come by for companies in certain countries, which may lead to less geographically diverse applicants.
Somewhat surprisingly, Minds + Machines CEO Antony Van Couvering, perhaps sensing which way the wind is blowing at ICANN, has reluctantly backed the original COI model, but suggests a “simple short-term fix” to reduce the cost to applicants.
When determining the amount of the COI, applicants should be free to base it on their own “worst case scenario” registration volume projections, rather than their “most likely” models, on the basis that registries are unlikely to go out of business if they meet their revenue targets:

Presumably if you’re hitting your numbers you’re in good shape financially. It’s the low numbers you have to worry about. Setting the amount of the COI at this more reasonable and likely threshold will take care of the vast majority of failures.

ICANN only received comments from eight people on the COF proposal, and unsurprisingly they’re all (with one possible exception) looking out for their own financial interests.
Without a crystal ball, deciding which model will be “best” for the new gTLD program is a very tough call, but ICANN’s board of directors is expected to do so on Thursday.

US Senate to hold new gTLDs hearing

A US Senate committee is to hold a hearing into ICANN’s new generic top-level domains program next Thursday.
The Committee on Commerce, Science, and Transportation will “examine the merits and implications of this new program and ICANN’s continuing efforts to address concerns raised by the Internet community.”
It will be webcast on the Committee’s web site.
It is believed to have been scheduled due to lobbying by the Association of National Advertisers, which has an ongoing campaign to put a stop to the new gTLD program.
It will follow a similar hearing by the House Subcommittee on Intellectual Property, Competition and the Internet in May, which was used to vent outrage about the program but ultimately delivered nothing.
(Note: this story has been updated from the originally posted version to reflect information contained in the official announcement.)

Bulgaria told to forget about .бг

ICANN CEO Rod Beckstrom has advised Bulgarians to admit defeat in their ongoing campaign to have .бг approved as a local-script top-level domain to match .bg.
The country’s application for the Cyrillic label was rejected by ICANN’s IDN ccTLD Fast Track program last year because it was found to look too similar to Brazil’s .br.
Nevertheless, the local government and domain name groups have continued to press for the right of appeal, and have indicated they may apply again.
But in an interview with Novinite published today, Beckstrom says:

I would advise the Bulgarians to go for something else. The initial application for .бг was unsuccessful.
The job of ICANN, the organization, is to implement the policies that are developed by the global communities. Those communities did not allow the initial application to go through because of potential visual confusion. So I think the Bulgarians can go back and they can choose what they want to apply for.
The Bulgarians can apply for a three-character name, they can apply for .българия in Cyrillic, it’s really up to the local community.

He goes on to say that Bulgarians could wait for a change in policies then apply again, they could change their desired string, or they could abandon their plans altogether.
However, surveys have found little appetite among the Bulgarian public for alternative strings such as .бгр, .българия, .бя or .бъл.
It’s a tricky problem for ICANN, which is first and foremost tasked with ensuring DNS stability and security.
Confusingly similar TLDs lend themselves to security risks such as phishing, and my understanding is that if .бг were to be approved it would face opposition from interests in Brazil.
The Novinite interview also touches on the possibilities of .софия and .Пловдив, to represent the Bulgarian cities of Sofia and Plovdiv.
The .бг issue was the subject of some apparently heated discussion during the recent Domain Forum new gTLDs conference in Sofia, but I understand Beckstrom had left before that part of the agenda.
You can now watch the entire Domain Forum, including Beckstrom’s introductory keynote, for free on YouTube.

Wanted: somebody to object to new gTLDs

ICANN is looking for somebody to object to new top-level domain applications.
It’s put out a call for an Independent Objector, whose job it will be to file formal objections to new gTLDs that he or she determines may not be in the public interest.
ICANN is looking for somebody with an in-depth knowledge of the new gTLD program and extensive experience in multinational organizations.
The IO has been a planned component of the new gTLD program for a couple of years.
The role is designed to provide a way to kill off “highly objectionable” applications in cases where the affected community may lack the resources or organization to pay for an objection.
Essentially, the IO looks at public comments filed with ICANN and decides whether opposition to a gTLD is substantial enough to warrant a formal objection.
The IO may only use two of the Applicant Guidebook’s objection mechanisms – the Community Objection and the Limited Public Interest (formerly “morality and public order”) Objection and not trademark or string confusion grounds.
My view is that we’re likely to see very few “highly objectionable” applications. And now that ICANN has agreed to fund some government objections, the IO is likely to wind up being a bit of an easy ride for whoever successfully applies for the job.
Interested parties have until December 22 to apply. The job description can be found here.

US quietly revises IANA contract

ICANN will not be allowed to do business with groups designated by the US government as terrorists, according to one of many changes that have been quietly made to the IANA contract.
The IANA contract, which gives ICANN its ability to delegate top-level domains, is up for renewal following the publication of an RFP by the Department of Commerce earlier this month.
But Commerce substantially modified the RFP a week after its initial publication. It’s now about 20 pages longer than the original document, containing many new terms and conditions.
A few changes struck me as notable.
Terrorism
Among the changes is a ban on dealing with groups classified as supporting terrorism under the US Executive Order 13224, signed by President Bush in the aftermath of the the 9/11 attacks.
That Order bans US companies from working with organizations including the IRA, Hamas and Al Qaeda.
While the addition of this clause to the IANA contract doesn’t really change anything – as a US corporation ICANN is bound to comply with US trade sanctions – it may ruffle some feathers.
The new top-level domains Applicant Guidebook banned applicants involved in “terrorism” in its fourth draft, which caused complaints from some quarters.
It was revised over a year ago to instead make reference to US legal compliance and the US Office of Foreign Assets Control and its List of Specially Designated Nationals and Blocked Persons.
Khaled Fattal of the Mulitlingual Internet Group, who first described the unqualified Guidebook ban on “terrorism” as “racist”, continued to voice opposition to this rule, most recently at the ICANN public forum in Dakar, suggesting it betrays ICANN’s American bias.
Data Rights
The revised IANA RFP also contains a new section detailing the US government’s “unlimited rights” to data and software produced by the IANA contractor.
The new RFP states: “The Government shall have… Unlimited rights in all data delivered under this contract, and in all data first produced in the performance of this contract”
“Data,” it says, “means recorded information, regardless of form or the medium on which it may be recorded. The term includes technical data and computer software. The term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information.”
It’s not entirely clear what this clause could potentially cover.
By it’s very nature, much of the data produced by IANA is public – it needs to be in order for the DNS to function – but could it also cover data such as redelegation communications with other governments or private DNSSEC keys?
New gTLDs
There are no big changes to the section on new gTLDs, just one minor amendment.
Whereas the old RFP said that IANA must show that ICANN “followed its policy framework” to approve a gTLD, the new version says it must have “followed its own policy framework”, which doesn’t seem to change the meaning.
Other amendments to the RFP appear to be formatting changes or clarifications.
The more substantial additions – including the terrorism and data rights sections – appear to be standard boilerplate text designed to tick some boxes required by US procurement procedure, rather than being written specifically for ICANN’s benefit.
You can download the original and revised RFP documents here.

CADNA asks for new gTLDs second round

The Coalition Against Domain Name Abuse, having spent quite a lot of time and effort opposing ICANN’s new top-level domains program, wants ICANN to name the date for a second round.
In a letter to president Rod Beckstrom today, which was inspired by discussions at the recent What’s At Stake conference, CADNA president Josh Bourne writes:

We ask that the ICANN Board request an Issues Report to formally initiate a policy development process to determine when the next round of new gTLD applications will occur, thereby affirming its commitment to opening a second round in a timely manner.

As I’ve noted previously, ICANN has not named the date for the second round so far because it’s promised the Governmental Advisory Committee that it will review the first round first.
But businesses from outside the domain name industry are feeling like they’re being pressured into making a decision whether to apply for a gTLD they don’t necessarily want, Bourne says.

By not disclosing when it will open future rounds of new gTLD applications, ICANN is creating a condition of scarcity that will inevitably result in a massive land rush, where entities will scramble to apply for new gTLDs for the sole purpose of hypothetically “future-proofing” their identities in the new domain name space, without any immediate intentions to use their new gTLDs for innovative means.
Disclosing when it will open a second application round will not only alleviate the anxiety that businesses are feeling, it will give ICANN the chance to quell the animosity that has developed toward it among the business community.

The whole letter is worth a read. No matter what you think of CADNA, it’s difficult to argue with Bourne’s points (though please do so in the comments if you disagree).
Scare sales tactics are already a key source of mainstream hatred for the domain name industry at the second level. Now would be a good time to prevent the same thing happening at the top level too.
It will look very bad for ICANN in a few years’ time if the root is cluttered with useless, unused gTLDs created just because companies felt pressured into defensive applications.

Another 2,000 .uk fraud domains taken down

Nominet has suspended over 2,000 .uk domain names allegedly being used to sell counterfeit goods on the instruction of the Metropolitan Police.
The Met said in a statement today that the crackdown was designed to protect online shoppers in the run-up to Christmas. It did something similar last year and the year before.
The sites were allegedly selling bootleg products purportedly from brands such as Ugg, Nike and Tiffany.
Nominet said that it worked with is registrars to coordinate the suspensions, and that the registrants were all informed before their domains were taken down.
All the registrants were in breach of terms and conditions, it said.
A Nominet working group is currently in the final stages of creating a policy that will streamline the process of law enforcement domain suspensions, as I reported for The Register today.

Screen Actors Guild opposes new gTLDs

While it does not appear to be a member of the new Coalition for Responsible Internet Domain Oversight, the Screen Actors Guild has come out in opposition to new top-level domains.
The membership organization, which represents over 200,000 Hollywood actors, has asked US Secretary of Commerce John Bryson to persuade ICANN to delay the gTLD program until it can “demonstrate convincingly” that it will be in the public interest.
SAG national executive director David White wrote:

The ICANN proposal would unduly burden a diverse range of public and private brand holders, companies with whom our members are associated. This also presents an undue burden on our organization, as a globally recognized brand. Under this rule, many brand-holders would be forced to spend ever-greater amounts of time and resources simply to protect their brands.

Like many other opponents of the program, White also raises the conflicts-of-interest question that emerged following Peter Dengate Thrush’s move from ICANN’s chair to new gTLD applicant Minds + Machines.
SAG was not listed as a member of CRIDO, the huge cross-industry lobby group that formed to oppose new gTLDs last week, although its arguments are identical.

Europe dislikes US-only IANA rule

The European Commission is disappointed that only US-based companies are eligible to apply to take over ICANN’s IANA contract, but has otherwise welcomed the new deal.
As I reported Friday, the US National Telecommunications and Information Administration has put the IANA contract, which gives ICANN its powers to create new top-level domains, up for rebid.
While ICANN is generally expected to be a shoo-in for the contract, the NTIA tilted the odds in its favor by refusing to consider bids from replacement candidates from outside the US.
The EC said in a statement today:

The Commission believes greater respect should be given by the IANA contractor to respecting applicable law (such as EU personal data protection laws)… In that context, it noted with regret that non-US companies are not allowed to compete for the forthcoming IANA contract.

Otherwise, the EC said it was happy with the new provisions in the IANA contract, which promise to enforce mandatory conflict of interests protections on the winning bidder.
Neelie Kroes, European Commission Vice-President for the Digital Agenda said in a press release:

The new IANA tender is a clear step forward for global internet governance. A more transparent, independent and accountable management of the Internet domain names and other resources will reinforce the Internet’s role as a global resource.

The EC is also pleased that ICANN/IANA “will have to provide specific documentation demonstrating how the underlying decision-making process was supportive of the public interest” when new gTLDs are approved.
How this provision will be implemented, and how much power it gives ICANN’s Governmental Advisory Committee to kill new gTLD applications, is perhaps the biggest question hanging over the contract today.
The current IANA contract expires at the end of March next year, shortly before the end of ICANN’s first new gTLDs application window.

US puts ICANN contract up for rebid

The US government has put the IANA contract, which currently gives ICANN its powers to create new top-level domains, up for competitive bidding.
The National Telecommunications and Information Administration issued a request for proposals late yesterday, almost a week later than expected.
The Statement Of Work, which defines the IANA contractor’s responsibilities, is over twice at long as the current IANA contract, containing many deliverables and deadlines.
While the contract is open to bidders other than ICANN, ICANN is obviously the likely winner, so it’s fair to read the SOW in that context.
Notably, the section dealing with approving new gTLDs has been changed since the draft language released in June.
NTIA said previously that in order to delegate a new gTLD, ICANN/IANA “shall include documentation to demonstrate how the proposed string has received consensus support from relevant stakeholders and is supported by the global public interest.”
The new SOW has dropped the “consensus support” requirement and instead states:

The Contractor must provide documentation verifying that ICANN followed its policy framework including specific documentation demonstrating how the process provided the opportunity for input from relevant stakeholders and was supportive of the global public interest.

This could be read as a softening of the language. No longer will ICANN have to prove consensus – which is not a requirement of the Applicant Guidebook – in order to approve a new gTLD.
However, the fact that it will have to document how a new gTLD is “supportive of the global public interest” may give extra weight to Governmental Advisory Committee objections.
If the GAC were to issue advice stating that a new gTLD application was not in “the global public interest”, it may prove tricky for ICANN to provide documentation showing that it is.
The SOW also addresses conflicts of interest, which has become a big issue for ICANN following the departure of chairman and new gTLD proponent Peter Dengate Thrush, and his subsequent employment by new gTLD applicant Minds + Machines, this June.
The SOW says that IANA needs to have a written conflicts of interest policy, adding:

At a minimum, this policy must address what conflicts based on personal relationships or bias, financial conflicts of interest, possible direct or indirect financial gain from the Contractor’s policy decisions and employment and post-employment activities. The conflict of interest policy must include appropriate sanctions in case on non-compliance, including suspension, dismissal and other penalties.

Overall, the SOW is a substantial document, with a lot of detail.
There’s much more NTIA micromanagement than in the current IANA contract. Any hopes ICANN had that the relationship would become much more arms-length have been dashed.
The SOW includes a list of 17 deadlines for ICANN/IANA, mainly various types of compliance reports that must be filed annually. The NTIA clearly intends to keep IANA on a fairly tight leash.
You can download the RFP documents here.