Today’s new gTLDs decisions in full

ICANN’s board of directors passed two resolutions relating to new generic top-level domains at is meeting in Dakar, Senegal today.
While neither is particularly Earth-shattering, they are notable and therefore reproduced here in full.
The first relates to financial support for new gTLD applicants from developing nations.
ICANN has not figured out how to implement the recommendations of the JAS working group yet, but it hopes to do so before the end of the year.

Joint Applicant Support
Whereas, the Board has received the Final Report of the Joint Applicant Support Working Group (JAS WG), appreciates the work of the JAS WG created in April 2010 by the ALAC and GNSO, and thanks the entire ICANN community for the constructive dialogue leading up to and during this week in Dakar.
Whereas, the Board expresses its appreciation to the GAC and ALAC for their joint statement on the JAS WG report.
Whereas, the Board is committed to ensuring that the implementation of a support program for deserving applicants will be done in a manner to enable those applicants to effectively participate in and benefit from the first round of the New gTLD Program.
Resolved (2011.10.28.21), the Board takes the JAS WG Final Report seriously, and a working group of Board members has been convened to oversee the scoping and implementation of the recommendations arising out of that Report, as feasible.
Resolved (2011.10.28.22), the President and CEO is expected to commence work immediately and provide a detailed plan for consideration. If the plan is complete sufficiently in advance of its next scheduled Board Meeting set for 8 December 2011, the Board will seek to add a special meeting to its schedule prior to that date.
Rationale for Resolutions 2011.10.28.21 – 2011.10.28.22
In Singapore, the Board resolved that it would consider the report and recommendations of the Joint Applicant Support Working Group. The Board takes seriously the assertions of the ICANN community that applicant support will encourage diverse participation in the New gTLD Program and promote ICANN’s goal of broadening the scope of the multi-stakeholder model. In its deliberations, the Board is balancing its fiscal responsibility in launching the New gTLD Program, the desire to provide a support program in the first round, and the time required to obtain additional funding. While the Board solution is not complete, there is a vision for accomplishing each of those three goals.  As required for assessment within the Affirmation of Commitments, there is no security and stability impact on the DNS. Part of the further work required through this resolution will assess the affect of this work; however there is no affect on ICANN’s fiscal resources as a result of this immediate action.

The second resolution, which caused considerable debate among board members, relates to funding of the much-criticized new gTLDs communications campaign.
The board approved an additional $900,000 for outreach, much of which will apparently go into the pockets of newly hired PR firm Burson-Marsteller.

Budget Request – New gTLD Communications Plan
Whereas, at the Paris ICANN meeting in 2008, the Board adopted the GNSO policy recommendations to introduce new Generic Top-Level Domains (new gTLDs), including at least a four-month communications period to raise global awareness.
Whereas, the Draft New gTLD Communications Plan (link) describes the global outreach and education activities that will be conducted in each of the ICANN geographic regions.
Whereas, the FY 12 budget allocates US $805,000 to fund this effort.
Whereas, planning and subsequent execution of the Communications Plan has indicated the need for a full service global public relations firm to ensure ICANN effectiveness in this effort.
Whereas, funds can be re-allocated in the adopted ICANN Budget to support the augmented communications effort without materially affecting performance in other areas.
Whereas, at its 22 October 2011 meeting the Board Finance Committee approved a recommendation that the Board approve an additional expenditure of US$900,000 for the execution of the Communications Plan.
Resolved (2011.10.28.23), the Board approves an additional expenditure of up to US $900,000 for the remaining three months of the Communications Plan, to be used for the retention of Burson-Marsteller, a global public relations firm, to work towards the goal of raising global awareness of new Generic Top Levels Domains consistent with the terms of the Communications Plan.
Resolved (2011.10.28.24), the Board authorizes the President and CEO to enter into any contracts necessary to fulfill the objectives of the New gTLD Communications Plan to the extent those contracts do not exceed the budget for the Communications Plan.
Rationale for Resolution 2011.10.28.23 – 2011.10.28.24
The budget for the Board-mandated new gTLD communications program is currently US $805,000. That figure was based on an earlier draft communications plan.
The current plan is more expansive and ambitious. It is based on the premise that every potential applicant should be aware of the program’s opportunities and risks, and thus it is aimed at building maximum awareness through multiple communications channels. It also focuses more strongly on developing countries.
The Plan is built on four principal efforts:
1. Regional “road shows” and public events;
2. Earned media – broadcast, online and print;
3. Social media; and
4. Global information through paid advertising, and multiplying these efforts through the community.
The New gTLD Communications Plan is neutral in its presentation. ICANN is not promoting applications for new gTLDs or advocating that any organization apply for one. Rather, ICANN is providing essential information and raising awareness of the New gTLD Program.
The current efforts limited in scope. ICANN has determined that retaining a full-service worldwide public relations firm to further coordinate ICANN’s efforts will assure that ICANN is able to attain the goal of the New gTLD Communications Plan.
ICANN has identified a well-respected global public relations firm, Burson-Marsteller, that can provide a broad range of awareness-raising services. ICANN will have access to the firm’s extensive network with an established presence in 91 countries, over 40 of them developing nations. These local and regional assets are invaluable. ICANN also will benefit from the firm’s expertise in digital and social media. ICANN will retain editorial control over all implementation aspects of the New gTLD Communications Plan.
Securing a global public relations firm of this caliber will contribute greatly toward ensuring success of the New gTLD Communications Plan. And as the first deliverable of the New gTLD Program, success of the New gTLD Communications Plan is critical.
Approval of this resolution will positively affect ICANN’s accountability and transparency by globally maximizing the spread of information about ICANN itself. This action will have no effect on the security, stability and resiliency of the domain name system.
The New gTLD Communications Plan will be conducted within the existing ICANN budget. This effort will be funded out of contingency funds, so the expenditure will not affect ICANN’s ability to perform and accomplish its other goals and objectives.

More later.

New gTLD risk fund rubbished by .brand advocate

Proposals to change the way new top-level domains are insured against failure will put the whole new gTLD program at risk, according to an intellectual property lawyer.
Speaking at a session at the ICANN meeting in Dakar today, Paul McGrady of the law firm Greenberg Traurig said the changes could even lead to a lawsuit that would delay the January 2012 launch of the program by at least a couple of years.
The debate was sparked by a proposal from the registries to restructure the Continued Operations Instrument, a financial backup designed to fund gTLD operations after their businesses fail.
ICANN currently plans to ask each applicant to submit a COI sufficient to cover the cost of running their own gTLD for three years in the form of cash in escrow or a letter of credit.
But the registry proposal calls instead for a Continued Operations Fund that would pool the risk between applicants, with each applicant paying just $50,000 up-front.
While the COI implicitly assumes that all new gTLDs could crash and burn, the COF assumes that only a small number of businesses will fail, as I reported earlier this month.
But McGrady, apparently speaking for the Intellectual Property Constituency, gave a startlingly different interpretation of the COF, from the “.brand” applicant perspective.
A .brand applicant can secure a letter of credit sufficient to cover the COI for as little as $2,000, he said. A $50,000 payment to the COF would dramatically increase its costs, he said.
“That money is taken from the .brand applicant and given to the shaky start-ups that shouldn’t be applying anyway,” he said. “It’s a redistribution of wealth.”
“If you can’t meet the [Applicant] Guidebook’s current requirements, you are dramatically under-capitalized,” he said. “Don’t apply.”
He said that if ICANN decides to add the $50,000 cost before January, it’s likely that some of those brands that oppose the program anyway will use it as an excuse to sue for delay.
“If the ICANN community would like to tee up for a litigation issue which could bring round one to a halt before it opens, this is it,” he said.
He further said that any back-end registry services providers targeting .brand clients had better distance themselves from the COF proposal if they want to get that business.
“Anyone in the room with a vested interested in this process moving forward, this is not the issue to back,” he said.
While the specific proposal up for debate was drafted by the Public Interest Registry and Afilias, the concept of a COF is has the backing of the ICANN registry stakeholder group.
As far as FUD goes, McGrady’s presentation was pretty blatant stuff, but that does not necessarily mean it’s not true.
His tone seemed to cause some consternation in the room.
Likely applicant Ron Andruff said that McGrady was employing a “scare tactic about how things might get delayed because big corporations don’t want to park money”.
Several others pointed out that smaller community applicants and applicants from certain countries may be unable to secure a letter of credit as easily as a large brand applicant.
Those applicants would have to put cash in escrow, tying it up and making it harder to market their gTLDs… thus leading to a greater chance of failure.
But McGrady stuck to his “redistribution of wealth” line.
“What we’re talking about is a last-minute change to the Guidebook to benefit applicants that don’t have sufficient funds,” he said.
He was not alone speaking out against the COF idea.
Richard Tindal of likely gTLD applicant Donuts said that many projections about new gTLDs are being made by a small number of registries that are making similar assumptions.
If these assumptions turn out to be flawed, the risk of gTLD failures could be bigger than expected.
“If a hurricane hits a house in the street, it’s going to hit all the houses in the street,” he said.
The COF/COI debate is open for public comment until December 2.

Top ICANN staff get pay raises

ICANN’s general counsel and chief operating officer were granted pay raises by the board of directors at a meeting last weekend.
A review of market data concluded that John Jeffrey and Akram Atallah both were being paid less than the target 50 to 75 percentile of comparable executives in other companies, the board said in a partially-redacted resolution.
The resolution says that neither man should see an annual raise of more than 15%.
The board’s meeting also set the bonus goals for CEO Rod Beckstrom and ombudsman Chris LaHatte.

Beckstrom: next ICANN CEO should be an outsider

ICANN CEO Rod Beckstrom has called on the organization to replace him with somebody from outside of the domain name industry.
His remarks, at the opening ceremony of its meeting in Dakar yesterday, came as the organization’s decisions are coming under increasing scrutiny from outside the domain name industry.
“I hope that the person who replaces me will be of the highest integrity and has no recent or current commercial or career interests in the domain industry, because ICANN’s fairness, objectivity and independence are of paramount importance to the future of the internet,” Beckstrom said.
“We are not here in the domain name business,” he said. “We are here to serve the global public interest.”
Beckstrom generally uses his ICANN meeting opening remarks to fire-fight the latest pieces of criticism directed at the organization and yesterday was no exception.
His comments should be read in the light of ongoing claims that the new gTLDs program was approved prematurely due in part to the business interests of former chair Peter Dengate Thrush.
Dengate Thrush left ICANN in June, shortly after helping to approve the program, and promptly took up a position with gTLD applicant Minds + Machines.
Organizations opposed to the program, such as the Association of National Advertisers, have seized on the controversy as a stick to bash ICANN with.
Since June, there have been calls for ICANN to revisit its conflicts of interest and ethics policies, which it seems to be taking very seriously.
Every member of the ICANN board of directors has already been ruled out of the CEO search, for example.
Beckstrom elaborated on his comments at a press conference yesterday.
“My view very strongly is that the organization can and should be led a party who does not have a vested personal business interest or history specifically in the domain name industry,” he said, “lest the efforts of the organization be potentially skewed in such a direction from a policy or operational standpoint, in terms of being more sensitive to the needs of the industry as opposed to the global public interest.”
Chairman of the board Steve Crocker said Beckstrom’s opinions were valuable, but his own, representing only one input into the process of creating CEO search criteria.
“We obviously want to balance two factors,” he said. “We’re very concerned about conflicts of interest and at same time we want the widest and most capable pool of candidates possible.”
There have previously been calls for ICANN to hire somebody already familiar with its operation, in order to reduce the learning curve for Beckstrom’s replacement at a time when the organization is in the midst of the new gTLD evaluation process.

IANA contract only for US companies

The US Department of Commerce has announced the date of its RFP for the IANA contract, stating that only wholly US-based organizations are welcome to apply.
Commerce, via the National Telecommunications and Information Administration, said it intends to accept proposals from potential contractors between November 4 and December 4.
Among other things, the IANA contract is what gives ICANN its powers over the domain name system’s root – its ability to delegate gTLDs and ccTLDs to registries.
It is due to expire at the end of March next year, having been extended from its original expiry date of September 30. ICANN is of course the favorite candidate.
ICANN had asked for a longer-term or more arms-length contract, to dilute the perception that IANA is too US-centric, but NTIA has indicated that it intends to decline that request.
However, the duration of the contract has been changed.
The current IANA contract was a one-year deal, with four one-year renewal options. The next will be for a three-year base period, followed by two two-year renewal options, according to Commerce.
“The current unilateral structure of the IANA functions contract should evolve to meet the needs of the global community,” ICANN CEO Rod Beckstrom said during his opening remarks at ICANN’s 42nd public meeting in Dakar, Senegal yesterday.
He noted that the US government originally said, in a 1998 white paper, that ICANN would ultimately take over the IANA functions entirely, cutting it off from government.
“We hope that progress towards the vision articulated by the US government’s white paper will be made in the next agreement and we hope and we expect to see a roadmap for the realization of this vision in the future,” Beckstrom said.
Now that Commerce has made such a big deal out of the fact that only US-based organizations are welcome to apply to run IANA, that goal seems further away.
It’s also notable that the next IANA contract will be a single document.
The NTIA had previously floated the possibility of splitting it into three functions – protocol management, DNS root management and IP address allocation – but the idea was not well-received.

New gTLDs: no advantage to applying early

ICANN has confirmed that new top-level domain applications filed early in next year’s application window will not get priority over those filed right at the end.
The subject of “batching” – the way ICANN plans to divide applications into more easily managed chunks of 500 – has seen some debate recently.
Some applicants and consultants have said that filing your application January 12 rather than April 12 would be a wise move, despite the evidence to the contrary.
Now ICANN senior vice president of stakeholder relations Kurt Pritz has busted the myth, during a session on new gTLDs with the Generic Names Supporting Organization in Dakar today.
“There’s no advantage to applying early or later in the process,” he said. “As long as your application is in by the due date it has the same chance of being in any batch.”
It doesn’t come much clearer than that.
ICANN has said that it only plans to process 500 applications at a time. If there are significantly more than 500, then it will process them in batches.
Due to the length of time it is expected to take to process an application, finding yourself in dumped into the second batch could add a few quarters to your go-live runway.
If you’re a commercial gTLD applicant, there could be a significant first-mover advantage to being in the first batch. Revenues from speculative and defensive registrations could be higher, before the novelty of new gTLDs gives way to fatigue.
Applicants in that position are going to use every trick in the book to streamline their process through ICANN and maximize their chances of being in the first batch.
While ICANN has not yet decided how to create the batches, it has ruled out filing time from the criteria. Pritz talked the GNSO through some of its current thinking today.
The preferred option is random selection. The problem with this idea is that it may fall foul of US gambling laws if it fits the definition of a lottery.
It sounds stupid, but it’s happened before: when Neustar introduced a random element to its launch of .biz, it would up having to pay $1.2 million to settle claims that it ran an illegal lottery.
“The issue of random selection is that we just have to make sure it complies with all possible applicable laws,” Pritz said. “Our initial legal research points out that this is real risk… but it is the most attractive form of selection because it is objective and fair.”
The other option under consideration is a “secondary time stamp”, Pritz said. This unhelpful label caused some head-scratching during the GNSO session today.
Pritz explained by analogy: imagine every applicant was asked to send a letter to ICANN, and the order of the batches would be determined by the order in which the letters are received.
The important thing to note is that this secondary time stamp would not be based on the date the application itself was submitted to ICANN.
Pritz said that ICANN had also discussed a “charity auction” batching method, but that this idea has now been ruled out.
Whatever mechanism is decided upon, it seems that applicants will have the opportunity to opt in or opt out of the first batch. Some .brand applicants currently clueless about how to use their gTLD may not be super-interested in getting priority processing, for example.
“We think those numbers are non-negligible,” Pritz said.

Will ICANN approve cheap gTLDs for poor applicants?

One of the big questions at ICANN’s 42nd public meeting in Dakar next week is whether the board of directors plans to approve subsidized new gTLD application fees for worthy applicants.
A volunteer working group known as JAS came up with a set of recommendations last month that would lower the $185,000 fee for applicants from developing nations with public benefit missions.
It was a wide-ranging set of proposals that would stretch beyond the scope of the $1 million to $2 million ICANN approved for applicant support initiatives at its last meeting in June.
Chiefly, JAS wants the application fee reduced to $45,000 for qualified developing-world applicants, meaning ICANN would have to find the funds to cover the $140,000 shortfall elsewhere.
In addition, JAS wants ICANN to set up a fund to loan money to these same applicants. It also wants these applicants to be able to pay fees on a staggered schedule.
Whether it was deliberate or not (I suspect it was semi-deliberate), the JAS wish-list seems to me to go above and beyond the support the ICANN board said it was prepared to offer in June.
I don’t think the board will grant those wishes when it meets next Friday, and here’s a few reasons why.
First, CEO Rod Beckstrom has already basically ruled out blanket fee reductions, even for poorer applicants, and he did so after the board had already discussed them.
At an ICANN panel on new gTLDs in London last month, Beckstrom was asked by an audience member if the application fee could be reduced before January.

At roughly 32 minutes into the embedded video, this is what he said:

There’s no plans to reduce the fee and I could not contemplate that happening before the program opens. The fees have been determined and there’s no process to review them, and there would be no basis at the present time because the costing estimates in the program appear to be reasonably accurate.

He went on to say that economies of scale may lead to a reduction in fees in future rounds, but did not mention the JAS recommendations at all.
As I was also on the panel, I called him on the omission later in the discussion, roughly 45 minutes into the video above. He said:

The board of directors did make a directional indication in Singapore to set aside up to a million to two million dollars for financial support for applicants…
However, it’s not a repricing of the fees, it would be some type of support for those applicants. A reduction in the application fee or effectively subsidizing the application fee is one possible concept, but what I can tell you as the CEO and as a board member is that board’s indication is one to two million dollars, not an unlimited number, so can do math and figure out what might be possible and what might not.
We’re not going to change the program fees, it just means there might be some benefit to or some support for some applicants, but it may not come in the form of that subsidy for the fee.

What we have here is JAS asking for a fundamental restructuring of the application fee in certain circumstances, and ICANN’s CEO saying that’s not likely to happen.
At that time, the JAS report had not been formally submitted to the board, but it had nevertheless been seen and discussed by the board at its two-day retreat in mid-September.
The GNSO, which had been frustrated with the cross-constituency structure of the JAS for some time, didn’t even formally approve the report before forwarding it to the board, due to time constraints.
Another indication of the board’s thinking on the JAS recommendations comes from the minutes of its Finance Committee meeting, September 15. Here’s an extract:

Staff has initiated efforts to be ready for implementation if and when approved. Establishment of a fund – a short-term mechanism for earmarking funds for applicant support, and a long-term formal mechanism for several purposes. Meeting community expectations: Board had approved US $2mm, while the JAS/GAC-ALAC recommendations would be more costly. Four tasks: developing criteria based on the JAS report plus practical concerns, developing procedures, entity for considering applications, and mechanism for holding the funds. Discussed the need to stay within the mission and purpose of ICANN and the ability to set-up special funds.

There’s no mention of application fees, but there is an acknowledgment that the JAS recommendations would be more expensive to implement than just the $2 million ICANN has already set aside.
There’s also talk of “practical concerns” and the “need to stay within the mission and purpose of ICANN”, all of which says to me that there’s a worry JAS asked for too much.
We’ll have to wait until next Friday to find out for sure, but my guess is that the board will likely side with ICANN’s bean-counters and that the JAS will not get much of what it asked for.

What’s At Stake conference bans new gTLD consultants

A conference in New York next month has been set up for marketers to discuss ICANN’s new top-level domains program without pitches from consultants.
What’s At Stake, scheduled for November 1, is for new gTLD skeptics, primarily marketers from large companies that will be impacted by the program.
It’s going to discuss the implications of the program and a few ways ICANN could tweak it to make it less daunting for large corporate applicants.
The conference, found at whatsatstake.com, is being organized by New York marketing pro Judy Shapiro, in conjunction with CADNA, the Coalition Against Domain Name Abuse.
Former ICANN chair Esther Dyson, who has recently emerged as a fierce critic of the program, is scheduled to keynote the event.
The goal is not to “bash ICANN”, Shapiro told DI in an interview yesterday.
Unlike the Association of National Advertisers and other trade groups, the conference will focus on changes that could be made to the program, rather than its outright suspension, she said.
Primarily, Shapiro wants to see ICANN name the date for a second round of applications.
“If they just said they’re going to do another auction in so many months time, it would be a thousand times better right away,” she said, referring to a second application round rather than an actual “auction”.
Currently, the first application window is scheduled to run from January 12 to April 12 next year. There’s no fixed date for a second round, and some say it could be five years before we see one.
This has economically incentivized new gTLD consultants and registry service providers to play up the “clock is ticking” and “it may be your only chance to apply” memes.
While accurate, this has arguably helped cast the domain name industry yet again as a bunch of borderline extortionists focused primarily on pumping defensive registrations.
It also could mean that some large companies fire off applications for far more gTLDs than they could conceivably need or use, just in order to “defensively” own a keyword related to their industry.
If that happens, it’s quite possible that we’ll see a bunch of dormant or otherwise half-assed extensions go live, substantiating the view that new gTLDs are a waste of time and that .com is king, etc. etc. etc.
The ICANN program as it stands today is “brilliantly constructed to force everyone to buy everything they want in one fell swoop,” Shapiro said.
The problem with naming a second-round date is of course that the first one is likely to take years to run its course. Everybody is expecting some kind of litigation, which could delay any schedule.
Shapiro herself expects that there will be a lawsuit designed to delay the program at some point between now and January.
Shapiro’s background is in corporate brand management for companies such as AT&T, Lucent and CA. She currently runs the online marketing company engageSimply.
“I was very familiar with ICANN. It was not a mystery to me,” she said, explaining her decision to launch the conference. “But I found I was clueless [about the new gTLD program] and I was shocked that I was clueless. I did a survey of 40 friends at top companies, and they were clueless too.”
She decided to offer a conference after she read an August 16 AdAge op-ed by Alexa Raad, CEO of the consultancy Architelos, which she said many marketers dd not understand.
But What’s At Stake is an invitation-only event, and new gTLD consultants are not welcome.
“I am paying for it, I do not want any pitches,” said Shapiro.
While she is trying to secure the attendance of an ICANN executive, she said the organization is being “not so forthcoming”, even maybe a little “defensive”.
If true, this is a pity. It strikes me that these the kinds of people ICANN needs to be reaching out to, even if it means one of its regular expository go-to guys has to squirm in his chair for a few hours.
“They’ve done such a bad job reaching out to this community,” Shapiro said. “Everyone I’m talking to has said: Why are they doing this?”
I put it to her that the new gTLD program has been in development for several years, and that literally anybody was able to participate in the creation of the Applicant Guidebook.
“The problem has been that the issue of domain management falls usually under the technical and legal sides of the house,” she said. “There’s been no collaboration between the IT, legal and marketing folks.”
Marketing people, usually focused on making short-term numbers, are only just waking up to the possibilities and potential problems that new gTLDs will create, she indicated.
The message that the new gTLD program is a cross-disciplinary challenge is also one that many new gTLD consultants have been preaching since even before ICANN approved the program in June.
There’s a convergence of views, to an extent, here. The problem seems to be the apparent disconnect between what the domain name industry thinks marketers should think and what they do think.
Marketers have been far more focused recently on the “local/mobile/social triad” of disruptive advertising technologies, rather than on new gTLDs, Shapiro said.
“The ICANN industry is completely disconnected from the realities of marketing industry,” she said.
The other demand Shapiro/CADNA has for ICANN is for the program to be made more corporate-friendly, but this appears to be very much a secondary concern.
The program currently requires applicants to disclose personal information about their company principals, which sits uncomfortably with many senior executives at large brands, for example.
The Continued Operations Instrument, a financial bond designed to fund failover support for defunct registries, is also a concern. As I noted earlier in the week, it seems unnecessary to impose this on single-registrant .brand applicants.
There are already at least two special provisions in the Applicant Guidebook that exclude .brand registries from certain commitments, so creating more would not be unprecedented.
The problem of course is that as soon as ICANN starts giving extra privileges to certain classes of applicant, it runs the risk of creating loopholes that can be gamed by other applicants.
What’s At Stake starts at 8.45am local time November 1. Shapiro said she’s hoping to webcast it and possibly even allow questions from people not able to attend in person.

Orange sponsors ICANN 42

The telecoms firm Orange has become a platinum sponsor of ICANN’s 42nd public meeting in Dakar, Senegal next week.
It’s a rare example of a company from outside the domain name industry handing over the big bucks to associate itself with ICANN.
While the company says it’s doing it for branding purposes, I’m sure it’s likely to set tongues wagging that Orange is a potential candidate for a .brand top-level domain.
If .apple is the no-brainer that is constantly used in articles to illustrate what a .brand is – and to highlight possible contention/objection issues – then .orange surely falls into the same category.
Platinum sponsorship for the Dakar meeting, which kicks off at the weekend, starts at $75,000. There are no takers for any of the other more-expensive sponsorship tiers this time.
Others paying up at this level are VeriSign, as usual, and the Public Interest Registry, which is publicizing its .ngo (non-governmental organizations) gTLD application.

With 86 days to go, the cost of new gTLDs is still unknown

If you’re planning to apply for a new generic top-level domain or two, wouldn’t it be nice to know how much it’s going to cost you?
It’s less than three months before ICANN opens the floodgates to new gTLD applicants, but you’re probably not going to find out how big your bank account needs to be until the last minute.
With 86 days on the clock until the application window opens, and 177 until it closes, there are still at least two huge pricing policies that have yet to be finalized by ICANN.
The first relates to reduced application fees and/or financial support handouts for worthy applicants from developing nations. I’ll get to that in a separate piece before Dakar.
The second is the controversial Continued Operations Instrument, a cash reserve designed to ensure that new gTLDs continue to operate even if the registry manager goes out of business.
In the current Applicant Guidebook, prospective registries are told to prove that they have enough money – either with a letter of credit or in a cash escrow – to keep their gTLD alive for three years.
To be clear, the COI money doesn’t go into ICANN’s coffers; applicants just need to show that the cash exists, somewhere.
The funds would be used to pay the Emergency Back-End Registry Operator (whichever company that turns out to be) in the event of a catastrophic gTLD business failure.
With hundreds of new gTLDs predicted, many of them likely to be laughably naive, we’re likely to see plenty of such failures.
With that in mind, ICANN wants to make sure that registrants and end users are not impacted by too much downtime if they put their faith in incompetent or unlucky registries.
It is estimated that the COI will amount to a six-figure sum for almost all commercial registries. For generics with a higher projected registration volume it could easily run into the millions.
It’s controversial for a number of reasons.
First, it raises the financial bar to applying considerably.
Forget the $185,000 application fee. Under the COI provision, applicants need to be flush enough to be able to leave millions of dollars dormant in escrow for at least five years.
It’s been sensibly argued that this money would be better devoted to making sure the registry doesn’t fail in the first place.
Second, even though the Guidebook gives .brand applicants the ability to shut down their gTLDs without the risk of another provider taking them over, it also expects them to create a COI.
This appears to be an unnecessary waste of cash. If a single-registrant .brand gTLD fails, the registry itself is the only registrant affected and the COI is essentially redundant.
Third, some applicants are thinking about low-balling their business model projections in order to keep their COI to a manageable amount.
This, as the better new gTLD consultants will tell you, could be a bad idea. When applications are reviewed the evaluators will be looking for discrepancies like this.
If you’re making one set of financial projections to investors and another to ICANN, you risk losing points on and possibly failing the evaluation.
Anyway, with all this in mind (and with apologies for burying the lead) ICANN has just said that it’s thinking about completely revamping the COI policy before applications are accepted.
Seriously.
ICANN’s Registry Stakeholder Group community has made a proposal – which appears to be utterly sensible on the face of it – that would reduce costs by pooling the risk among successful applicants.
The RySG said it that the COI “should not be so burdensome as to actually become a roadblock to the success of new registries by causing capital to be tied up unduly.”
Rather than putting up enough cash to cover its own failure, each successful applicant would pay $50,000 up-front into a Continued Operations Fund that would cover all potential registry failures.
The COF would be administered by ICANN (or possibly a third party), and would be capped at $20 million. In a round of 400 new gTLDs, that target would be reached immediately.
If the COF fell short of $20 million, each registry would have to pay $0.05 per domain name per year into the fund until the cap was reached.
It’s a shared-risk insurance model, essentially.
While ICANN’s COI policy is ultra-cautious, implicitly assuming that ALL new gTLDs could simultaneously fail, the COF proposal assumes that only a small subset will.
Reverse-engineering the RySG’s numbers, the COF appears to cover the risk of failure for registries representing some 10 million domain-years.
ICANN has opened up the proposal to public comments until December 2.
This means we’re unlikely to see any concrete action to approve or reject the COF alternative until, at the earliest, about a month before the first round application window opens.
ICANN likes cutting things fine, doesn’t it?