ICANN selects new gTLD backup providers

Neustar, Nominet and CNNIC have been picked to provide backup registry services for new gTLDs that fail.
ICANN has named the three companies as Emergency Back-End Registry Operators for the new gTLD program.
They’ll be responsible for taking over the management of any new gTLD that goes out of business, putting registrants at risk of losing DNS resolution and registry functions.
The idea is that the EBERO(s) would be paid out of funds placed in escrow by gTLD applicants, in order to gracefully wind down any failed TLD over the space of a few years.
In reality, I doubt there’s going to be much call for their services; M&A activity is a more likely outcome for gTLDs that fail to meet their sales expectations.
ICANN highlighted the geographic diversity of the three companies (Nominet is British, Neustar American and CNNIC Chinese) as a stability benefit of its selections.
The three were chosen from 14 respondents to an RFI published last year.
The absence of an EBERO was one of the shortfalls of the new gTLD program highlighted by Verisign in its recent letter warning ICANN about perceived security and stability risks.
While ICANN has acknowledged that the EBEROs are unlikely to be ready to roll before the first new gTLDs start to launch, it has noted that they don’t need to be.
If any new gTLD catastrophically fails during the first few months of launch, it will reflect extremely poorly on the financial and technical evaluations applicants have been undergoing for the last nine months.

Mystery web site proposes new gTLD “string change” system

Somebody out there is bummed that they can’t afford to win their new gTLD contention set.
A new web site, StringChange.org, is planning to petition ICANN to allow new gTLD applicants to change the string they’ve applied for, for an extra $100,000 fee.
It’s not clear who’s behind the proposal, which was sent to every new gTLD applicant via email today. The page is unsigned and the domain is registered behind Whois privacy.
The site states:

We are proposing that ICANN allow the option of a “String Change” to applicants in contention, allowing these applicants, if they so choose, to change their string to another string and rewrite the appropriate parts of their applications. In doing so, these applicants would relinquish the right to their original string that is in contention, and be assessed a reevaluation fee of $100,000.
Many applicants would choose this over going to auction, being outbid, and never having the opportunity to launch a TLD and implement their business models. This also creates fairness for smaller groups to have the opportunity to launch and operate a TLD, especially when they are currently up against corporate giants such as Amazon or Google.

It goes on to say that a special “String Change round” of applications would begin in 2014, restricted to applicants who don’t fancy their chances punching it out with Google at auction in 2013.
The system would enable applicants that do not want to change their strings to get to market earlier, the site reckons.
It’s soliciting email addresses for its ICANN petition.
Good idea? Bad idea? Mediocre satire? Cheap attempt to see which applicants have gotten cold feet?

ICANN to water down contract powers with “Public Interest Amendments”

ICANN has made a few tweaks to its proposed unilateral-right-to-amend powers in order to fend off open hostility from registries, registrars and new gTLD applicants.
The organization is set to announce “Public Interest Amendments”, a rebadged version of its hugely unpopular proposals for the Registry Agreement and Registrar Accreditation Agreement.
As previously reported, ICANN wants to be able to change both contracts in future, if there’s a “substantial and compelling need”, even if it does not have the majority support of the affected companies.
CEO Fadi Chehade has reportedly indicated that he won’t be budged on the need for some method for ICANN to make emergency changes to the contracts.
And during last night’s new gTLD applicants webinar, he made it clear that the RA and RAA will delay the launch of new gTLDs if registries and registrars cannot agree to ICANN’s terms.
But according to documentation seen by DI today — actually a flowchart of how the amendment process would work — these terms are going to be watered down, giving more power to commercial stakeholders.
Apart from the new Pubic Interest Amendment name, there appear to be three big changes.
First, there would be a way for registrars and/or registries to make a late-stage counter-proposal to the ICANN board if they didn’t like the look of a proposed amendment.
Second, any issues that fell within the so-called “picket fence” — the list of pre-agreed topics for which ICANN is allowed to make binding policy — would have to go into a formal GNSO Policy Development Process first.
Only if the PDP failed to reach consensus would the ICANN board of directors be able to step in and attempt to legislate unilaterally.
A practical effect of that would be to give contracted parties ample opportunity to delay amendments — possibly by years — that they weren’t happy with.
Third, PIAs would only cover changes designed to “ensure competition & consumer choice and promote consumer access to fair business practices” and explicitly “not to change ICANN fees, Consensus Policy Spec., or mechanism to change PIA process”.
This would prevent ICANN unilaterally amending the contract to make its amendment powers even stronger in future, which had been one criticism of the proposed process.
“The board’s ability to introduce an amendment is very tightly defined and limited in scope, so it’s only used in extreme cases and under very strict conditions,” Chehade said last night.
It appears — though I can’t be certain — that ICANN has also decided that the full board of directors, including those with identified conflicts of interest, would be able to participate in votes on PIAs.
That would mean registry and registrar representatives to the board would get to vote on amendments affecting their stakeholder groups.
Chehade is currently explaining all of this to a cautiously optimistic Registry Stakeholder Group on a conference call, and I believe more information is due to be published later this week.

Tucows, Directi and Namecheap to combine .online gTLD bids

Three applicants for the .online gTLD appear to have settled their differences in what I believe is the first public example of new gTLD contention set consolidation.
Tucows, Directi and Namecheap said today that that they plan to “work together to manage the .online registry.” From the press release:

applicants for the same TLDs have begun to compete, negotiate, and, in some cases, join forces to ultimately produce one winning bid.
The first such alliance was revealed today, when domain industry veterans Directi, Tucows and Namecheap announced that they would work together to manage the .online registry.

The companies are of course three of the most successful domain name registrars out there.
The press release does not specify how the combination will be carried out. Under ICANN rules, two of the applicants would have to drop their applications. It’s not possible to resubmit as a joint venture.
It also does not acknowledge that there are three other applicants for .online — Donuts and smaller portfolio applicants Dot Online LLC and I-REGISTRY Ltd — which are not party to the agreement.

Chutzpah alert! “Tube” domainer objects to Google’s .tube gTLD bid

Remember the “mystery gTLD applicant” that had promised to campaign against Google’s closed generic gTLD applications?
It turns out the company behind the campaign is actually Latin American Telecom, one of the three applicants for .tube, and that part of its strategy is a Legal Rights Objection.
According to a copy of the LRO kindly provided to DI this week, LAT claims that if Google gets to run .tube it would harm its Tube brand, for which it has a US trademark.
If you haven’t heard of Latin American Telecom, it, despite the name, appears to be primarily a domainer play. Founded in Mexico and based in Pittsburgh, its main claim to fame seems to be owning Mexico.com.
The company says it has also been building a network of roughly 1,500 video sites, all of which have a generic word or phrase followed by “tube.com” in their domains, since 2008.
It owns, for example, the domains IsraelTube.com, MozartTube.com, LabradorTube.com, AmericanWaterSpanielTube.com, DeepSeaFishingTube.com… you get the idea.
They’re all cookie-cutter microsites that pull their video content from Vimeo. Most or all of them appear to be hosted on the same server.
I’d be surprised if some of LAT’s domains, such as BlockbusterTube.com, PlaymateTube.com, FortyNinersTube.com and NascarTube.com, didn’t have trademark issues of their own.
But LAT was also granted a US trademark for the word TUBE almost a year ago, following a 2008 application, which gives it a basis to bring an LRO against Google.
According to its LRO:

The proposed purposes of and registrant limitations proposed for .TUBE by Google demonstrate that the intended purpose of Google’s .TUBE acquisition is to deprive other potential registry operators of an opportunity to build gTLD platforms for competition and innovation that challenge YouTube’s Internet video dominance. It is clear that Google’s intended use for .TUBE is identical to Objector’s TUBE Domain Channels and directly competes with Objector’s pre-existing trademark rights

There’s quite a lot of chutzpah being deployed here.
Would LAT’s ramschackle collection of –tube domains have any meaning at all were YouTube not so phenomenally successful? Who’s leveraging whose brand here, really?
For LAT to win its objection it has to show, among other things, that its TUBE trademark is famous and that Google being awarded .tube would impair its brand in some way.
But the company’s LRO is vague when it come to answering “Whether and to what extent there is recognition in the relevant sector of the public of the sign corresponding to the gTLD”.
It relies surprisingly heavily on its Twitter accounts — which have fewer followers than, for example, DI — rather than usage of its web sites, to demonstrate the success of the TUBE brand.
I don’t think its objection to Google’s .tube application is a sure thing by any stretch of the imagination.
There is a third .tube gTLD applicant, Donuts, but it has not yet received any LROs, according to WIPO’s web site.

Neustar leading the new gTLD back-end scores so far

New gTLD applications backed by registry service provider Neustar scored the highest results in the first batch of Initial Evaluation results.
All 27 of the applications that have had their IE results revealed by ICANN so far have easily passed the 22 out of 30 points threshold required for a passing score on the technical evaluation.
In most cases, each application had its technical questions answered by the applicant’s chosen back-end provider.
Eight different back-ends are involved in the first 27 bids, some with more applications than others.
Here’s the average score out of 30 for each company.
[table id=12 /]
Only Neustar and Verisign scored the full 30 points in an application with their name on it, but their averages were reduced by applications in which they fared less well.
It’s very early days, of course, with the full set of IE results not due to be completely published until August.
We’ll be tracking these scores as more results are released on DI PRO.

Directi sells 4,000 .pw domains in first half hour

PW Registry, the Direci unit looking after the .pw registry, said it received orders for 4,000 domain names in its first 30 minutes of general availability today.
Disappointing? It’s certainly not up to the standard of, say, .co, which was well into six figures in the same period when it launched a few years ago.
But .pw’s ambitions weren’t quite as lofty as .co’s. It’s the ccTLD for Palau, and its chosen meaning of “professional web” isn’t nearly as intuitive or valuable as .co’s “company”.
Still, it’s early days, and Directi says it saw a reasonable amount of domainer action during its landrush phase.
Landrush and sunrise period numbers have not been disclosed, but the company said that Apple, Pfizer, Volkswagen and Nokia obtained their trademarks during sunrise.
PW Registry has 110 registrars, including many of the big ones, selling its names.

Five interesting nuggets from the first batch of gTLD evaluations

ICANN gave many in the industry cause for celebration on Friday when it released its first batch of 27 new gTLD applications that have passed Initial Evaluation.
The plan is to release 30 per week, ramping up to 100 at some point in future, but three applications in the first 30 still have change requests or clarifying questions being processed.
Here are some interesting bits of information we’ve gleaned from the first batch.
Donuts has passed its background checks
Donuts has had the first of its new gTLD applications approved. This means that the evaluation team doing background screening found no reason to be fail the company due to its executives’ track records.
During the public comment period last year, Donuts’ opponents said the company should be barred from getting any new gTLDs because of its close ties to Demand Media, a company with a record of adverse UDRP decisions.
It was also claimed that a Donuts director was involved in cybersquatting the Olympic and Disney brands, but it turned out the director in question had left the company in late 2011.
But ICANN’s evaluation team appears to have given Donuts the all clear.
The Donuts application that has passed Initial Evaluation, for .商店 (shop/store), is one of 199 applications, each filed by unique corporate shells, that share a parent, Dozen Donuts LLC.
The balance of Donuts’ applying companies are owned by Covered TLD LLC, believed to be its joint venture with Demand Media. All 307 are signed up to use Demand Media’s registry back-end.
Seven IDN scripts passed IE
New gTLDs in seven internationalized domain name scripts — Chinese, Arabic, Japanese, Hindi, Korean, German, Cyrillic — have passed through Initial Evaluation.
Transliterations of .com/.net are apparently fine
Some of Verisign’s applications for transliterations of .com and .net in scripts such as Chinese and Hindi have passed IE, meaning the evaluators weren’t worried about possible clashes with their legacy equivalents.
There’s been some concern from some parts of the world that because the applied-for strings are meaningless in the relevant languages, but sound like “com” and “net” when spoken, that it could cause confusion.
New back-end providers have cause for celebration
While there was little doubt that back-end providers Verisign, Neustar, Afilias and CORE would receive passing grades by ICANN — they all run gTLDs already — new market entrants did not have reasons for the same confidence.
However, ARI Registry Services, Demand Media, CentralNIC, KISA, KSRegistry and KNET are all named back-ends for passing applications in the first batch.
This should come as a cause for celebration for these companies, and a relief for their clients.
Because many applications used the same boilerplate back-end text, there’s good reason to believe that other bids using these registry providers are likely to pass the technical portion of Initial Evaluation too.
Afilias doesn’t have any passes yet
Top-three player Afilias, so far, does not have any passing apps.
One of its clients is at position #7 in the priority queue, but it’s one of the three applications in the top 30 to be still chasing follow-up questions or change requests with ICANN.
Probably nothing to worry about here.

First 27 new gTLDs pass evaluation

ICANN has started reporting the results of Initial Evaluation in its new gTLD program as promised, delivering a passing grade to 27 applications today.
So far, no bids appear to have explicitly flunked IE, judging by ICANN’s web site.
However, some of the applications in the top 27 in the prioritization queue are still flagged as being in IE — the Japanese Chinese-script dot-brand .淡马锡 and Samsung’s .삼성.
ICANN said:

For some applications Initial Evaluation results were not yet available for one or more possible reasons such as: pending change requests, clarifying questions, or follow-up with applicants regarding missing information. The results for these applications will be published as soon as the relevant processes are completed.

Due to the way the queue was rigged, all 27 passes are for internationalized domain names, such as Verisign’s .net transliteration .大拿 and Amazon’s Japanese .fashion (.ファッション).
Those that have passed IE and have no objections and no contention can now pass in to predelegation testing and contract negotiations with ICANN.
All IE results are expected to be released by August.

Did Uniregistry over-sell the auction antitrust risk?

Uniregistry’s revelation that it believes private auctions to resolve new gTLD contention sets may be illegal — based on its talks with the US Department of Justice — has caused widespread angst.
Following yesterday’s news, some commentators — some interested — questioned the company’s motive for revealing that Justice had declined to give private auctions a clean bill of health under antitrust law.
Others wondered whether Justice had been given the full facts, whether it had understood the new gTLD program, and whether Uniregistry had accurately reported Justice’s advice.
Given that yesterday’s piece was straight news, I figured it might be good to delve a little deeper into the situation and, yes, indulge in some quite shameless speculation.
What is it that Uniregistry is saying?
Here’s the argument, as I understand it.
“Bid-rigging” is illegal in many countries, including ICANN’s native US, where the Department of Justice prosecutes it fairly often, securing billions of dollars in damages and sometimes criminal sentences.
More often than not, it seems, the prosecutions are related to government contracts, where agencies are looking for a company to carry out a job of work for the lowest possible price.
Bid-rigging emerges when contractors decide among themselves who is going to win the contract. If two contracts are up for grabs, two companies may agree to submit separate high-ball bids so that they can guarantee getting one contract each.
This, of course, inflates the price the government agency pays for the work. There’s no true competition, so prices are artificially high, harming the tax-payer. That’s why it’s illegal.
The ICANN new gTLD program is a bit different, of course.
First, ICANN isn’t a government agency. While it has quasi-governmental powers, it’s a private corporation. Second, it’s looking for high bids, not low bids. Third, it doesn’t care if it doesn’t see any money.
There can be little doubt that private auctions technically harm ICANN, because the winning bidder’s money would be divided up between applicants rather than flowing into ICANN’s coffers.
Uniregistry seems to believe that a new gTLD applicant signing a private auction agreement — basically, competitors agreeing to pay or be paid to decide who wins a contract — that takes money out of ICANN’s pocket could be considered illegal collusion.
But ICANN has stated regularly that it prefers applicants to work out their contention sets privately, explicitly endorsing private auctions and/or applicant buy-outs.
ICANN, it seems, doesn’t care if it is harmed.
According to Uniregistry, however, that doesn’t matter. Its view, following its conversations with Justice, is that what ICANN says is completely irrelevant: the law’s the law.
As the company said yesterday:

the Department emphasized that no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws. The decision means that the Department of Justice reserves its right to prosecute and/or seek civil penalties from persons or companies that participate in anti-competitive schemes in violation of applicable antitrust laws.

In other words, just because it’s very unlikely that ICANN would start filing antitrust suits against new gTLD applicants, the DoJ could feasibly decide to do so anyway.
Why would it do so? Well, consider that the thing ICANN is auctioning is a spot in the DNS root server, and the root server is ultimately controlled by the US Department of Commerce…
ICANN may not care about the money, but the thing it is selling off “belongs” to the United States government.
That’s the argument as I understand it, anyway.
Isn’t this all a bit self-serving?
Uniregistry’s press release and DI’s blog post yesterday were met with disappointment (to put it mildly) among some new gTLD applicants, auction providers and others.
They noted that Uniregistry had no documentary evidence to back up information it attributed to Justice. Some accused DI of reporting Uniregistry’s statement without sufficient skepticism.
It seems to be true that the company has not been a big fan of private auctions since the concept was first floated.
Uniregistry has applied for 54 new gTLDs, the majority of which are contested. Its main competitors are Donuts, with 37 contention sets, and Top Level Domain Holdings, with 21.
Who wins these contention sets depends on who has the most money and how much they’re prepared to pay.
Unlike Donuts, Uniregistry hasn’t gone to deep-pocketed venture capital firms. It’s reportedly funded to the tune of $60 million out of CEO Frank Schilling’s own pocket.
And unlike TLDH, which is listed on London’s Alternative Investment Market, Uniregistry doesn’t have access to the public markets to raise money. It seems to be better-funded, however.
Donuts raised $100 million to fund its new gTLD ambitions. It’s more than Schilling claims to have put into Uniregistry, but Donuts has spent much more on application fees.
Donuts is involved in 307 applications, many more than Uniregistry’s 54.
The money remaining for auctions is also spread much thinner with Donuts. It’s also in 158 contention sets, more than three times as many as than Uniregistry’s 45.
Private auctions arguably benefit Donuts because, depending on the auction model, it could reinvest the money it raises by losing an auction into a future auction. Its VC money would last longer.
The same logic applies to all applicants, but it becomes more of a pressing issue if you’re on a tight budget or have a large number of applications.
Uniregistry may have calculated that it stands a better chance of winning more contention sets against Donuts and TLDH if its competitors don’t get the chance to stuff their war chests.
Of course, Uniregistry could have simply refused to participate in private auctions in order to force an ICANN auction in its own contention sets. All new gTLD applicants have that power.
But by publicizing its antitrust concerns too, it may have also torpedoed private auctions for some contention sets that it’s not involved in.
That could limit the amount of money flowing from losing auctions to its competitors.
Another theory that has been put forwards is that Uniregistry went public with its Justice conversations — over-selling the risk, perhaps — in order to give its competitors’ investors jitters.
That might potentially reduce the capital available to them at auction, keeping auction prices down.
So did Uniregistry stand to benefit from playing up the risk of antitrust actions against new gTLD applicants? Probably.
Does it mean that its interpretation of its Department of Justice conversations is not completely accurate? Ask a lawyer.