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Governments call for new gTLD auctions ban

Kevin Murphy, June 17, 2024, Domain Policy

Governments have upped the stakes in their opposition to new gTLDs being auctioned off privately, now calling for an outright prohibition on the practice.

ICANN’s Governmental Advisory Committee today published its formal advice coming out of last week’s public meeting in Kigali, calling for ICANN to “prohibit the use of private auctions in resolving contention sets in the next round of New gTLDs”.

It’s a strengthening of previous language from last year’s Washington DC meeting which called for ICANN to “ban or strongly disincentivize private monetary means of resolution of contention sets, including private auctions”.

Private auctions were the most-common way that contests between new gTLD applicants with matching strings were resolved in the 2012 application round. Many tens of millions of dollars changed hands, with the losing bidders pocketing the winning bids.

But the practice came in for criticism from groups such as the GAC and the At-Large Advisory Committee, partly because it made it harder for non-commercial or less well-financed developing-world applicants to get a foothold in the gTLD space.

“The 2012 round was basically a game for millionaires,” ALAC chair Johnathon Zuck told the GAC at a meeting between the two groups last week. “There were many things that made the last round kind of a joke… but this was the very big thing that made the community look bad.”

Discussions with the ALAC, which wanted to issue joint advice with the GAC, seems to be at least partly responsible for the GAC aligning around advising a full-on ban on private auctions.

ICANN’s board of directors is broadly in favor of “discincentivizing” private auctions, but has stopped short of advocating for a full prohibition, according to directors’ public statements and board resolutions.

The Org commissioned a study from a New York company called NERA Economic Consulting, published shortly before the Kigali meeting, to look into ways to dissuade applicants from private auctions and encourage them towards ICANN’s “last resort” auctions — where ICANN gets all the money — or into joint ventures.

While it did not come up with any recommendations as such, the study did lay out some possible mechanisms — such as forcing applicants into last-resort auctions, or making them pay an extra fee if they want to resolve their contention sets privately.

Separately, ICANN has told the GAC it intends to reject another piece of its advice related to contention sets. The GAC had told ICANN last year:

To take steps to avoid the use of auctions of last resort in contentions between commercial and non-commercial applications; alternative means for the resolution of such contention sets, such as drawing lots, may be explored

But ICANN reckons a lottery might be illegal under California law. That’s pretty much what it said before it came up with “Digital Archery” during the last application round, and it turned out to not be completely correct.

It also disagrees with the GAC that non-commercial applicants in contention sets should be treated preferentially, with the board wary about having to pick winners and losers in the next round.

The board has therefore triggered the part of its bylaws that require it to hold formal negotiations with the GAC to see if they can come to a compromise before the advice is rejected.

ICANN: We will NOT police content

Kevin Murphy, June 10, 2024, Domain Policy

ICANN seems to have killed off the idea of content-restricting Registry Voluntary Commitments being included in registry contracts, judging by a conversation today between its board of directors and Governmental Advisory Committee.

Speaking moments ago at a session at ICANN 80 in Rwanda, director Becky Burr said the board took legal advice and decided that the Org’s bylaws do not allow it to enforce contractual commitments that involve content regulation.

“The board was looking at the legal issues there to determine whether under our bylaws we were permitted to accept and enforce Registry Voluntary Commitments related to the restriction of content… on Saturday at our board meeting the board has resolved that we can’t,” Burr said.

“We will not accept into the contracts the new registry commitments that involve the restriction of content,” she said.

The RVC-like Public Interest Commitments found in 2012-round gTLDs are grandfathered in the current bylaws and will not be affected by the RVCs decision, she said.

Registries will be free to make RVC-like commitments outside of their ICANN contracts, but ICANN will not enforce them, she said. She also said the board has ruled out hiring a third party enforcer, citing US case law and the First Amendment to the US constitution.

Burr said that if an Independent Review Process panel struck down a single RVC it would risk invalidating all of the RVCs in all registry contracts.

The board’s resolution will be published later this week, but its legal advice will remain confidential, she said.

The decision is a win for registries and registrars, which earlier this year responded to an ICANN consultation by saying it should not permit RVCs that regulate content. The Non-Commercial Stakeholders Group had even raised the possibility of legal action if ICANN went ahead with RVCs.

The opposing view was put forth by the Business Constituency, the Intellectual Property Constituency, and the At-Large Advisory Committee, all of which are now presumably feeling bummed out by the board’s latest decision.

More sticker shock as new gTLD fees could top $300,000

Kevin Murphy, June 10, 2024, Domain Policy

The base new gTLD application fee could top $300,000, according to an analysis released by ICANN at its meeting in Kigali, Rwanda, this morning.

The per-gTLD fee will likely range between $208,000 and $293,000, according to the latest estimate, but this does not include mandatory fees that have yet to be figured out that as a whole could amount to “tens of millions”.

ICANN is blaming inflation for most of the increase from the 2012 round, where the fee was $185,000. Staff said that if you take into account a 44% rise due to 14 years of inflation, the 2026 application fee could actually be lower in real-money terms.

The reason for the broad range provided is that ICANN still doesn’t have a good guess as to how many applications it will receive. The program is being run on a cost-recovery basis and ICANN has already budgeted for a spend of $70 million before the application window even opens.

If it only receives 500 applications, it could lose tens of millions of dollars even with a high application fee. With a fee of $242,000, ICANN would need 1,000 applications to make its money back, staff said during an ICANN 80 session today.

There were 1,930 applications in 2012, but demand in 2026 will depend a lot on how many desirable strings remain undelegated, particularly in non-English languages and non-Latin scripts, and how enthusiastic brand owners are about the dot-brand concept (or defensively registering their dot-brands).

The main unknown not included in the latest estimate is the cost of implementing the recommendations of the second Name Collision Analysis Project, which in May called for all gTLDs to be tested live in the DNS before being awarded to the applying registry.

Each of the NCAP2 recommendations could cost between “thousands” and “tens of millions” in total, which would be divided between all the applicants, staffers said. Scrawling on the back of an envelope, it looks to me like this could easily push the top end of the range well over $300,000.

The good news is that if ICANN gets a lot of applications and recovers its costs, it already anticipates giving applicants some of their money back. As an example, it said that if the fee is $220,000 and there are 2,000 applications, applicants could each get $35,000 back.

But that ray of sunlight was not enough to temper the concerns of community members in the room in Kigali today, several of whom sparred with CFO Xavier Calvez and new gTLD program lead Marika Konings over their calculations.

Registry services providers are already angry about the large increase in evaluation fees for the RSP program announced last month.

One thing that doesn’t seem to be under any dispute is that high fees will scare off some applicants, meaning the cost burden will be borne by fewer shoulders, meaning the fees did in fact need to be high; a self-fulfilling prophecy.

Rwanda picked for ICANN meeting

Kevin Murphy, June 26, 2023, Domain Policy

ICANN is inviting its community to Kigali, Rwanda, for its ICANN 80 public meeting.

The shorter “Policy Forum” meeting, the same format as the one that took place in Washington DC this month, will start from June 10 next year at the Kigali Convention Centre, ICANN’s board decided last week.

It’s the first time ICANN has visited Africa since before the Covid-19 pandemic and the first time Rwanda will have hosted a meeting.

ICANN has hosted meetings in Africa on 12 occasions over the last 25 years, in seven countries — Morocco, Egypt, Tunisia, Kenya, Ghana, Senegal and South Africa.

ICANN’s practice is to rotate meetings through each of its five geographic regions, but it rarely happens in a strict order and obviously the pandemic shook up scheduling.

Rwanda and questions about its safety and human rights record have been in the news here in the UK for the last couple of years due to the British government’s plan to deport illegal migrants there.

But the UK and US authorities class Rwanda as safe, as long as you stay away from contested border regions. Visas appear to be free upon arrival for all travelers, regardless of origin.