Strickling drops last-minute bombshell on new gTLDs

Larry Strickling, the man most responsible for overseeing ICANN in the US administration, has given an unexpected last-minute boost to opponents of the new generic top-level domains program.
In a letter to ICANN chair Steve Crocker tonight, Strickling says governments may intervene this May to impose new trademark protection mechanisms on the new gTLD program
Echoing the words of several Congressmen, Strickling, head of the National Telecommunications and Information Administration, said that after the first-round applications have been filed, ICANN might want to consider a “phased-in” approach.

Once the list of strings is made public, NTIA, soliciting input from stakeholders and working with colleagues in the Governmental Advisory Committee (GAC), will evaluate whether additional protections are warranted at the second level. Having the ability to evaluate the actual situations or conflicts presented by the applied for strings, rather than merely theoretical ones, will certainly assist and focus everyone’s efforts to respond to problems should they arise.

The letter could be seen as a win for the trademark lobby, which has been pressing the NTIA, Department of Commerce and Congress for months to delay or block the program.
However, reading between the lines it appears that Strickling believes the trademark protections already in the program are probably adequate, just woefully misunderstood.
The letter spends more time politely tearing into ICANN’s atrocious outreach campaign, observing that many trademark owners still “are not clear about the new gTLD program”.
Strickling pleads with ICANN’s leadership to raise awareness of the protections that already exist, to calm the nerves of companies apparently convinced by industry scaremongering that they’re being forced to apply for “dot-brand” gTLDs defensively.

…in our recent discussions with stakeholders, it has become clear that many organizations, particularly trademark owners, believe they need to file defensive applications at the top level.
…
We think, and I am sure ICANN and its stakeholders would agree, that it would not be healthy for the expansion program if a large number of companies file defensive top-level applications when they have no interest in operating a registry. I suggest that ICANN consider taking some measures well before the application window closes to mitigate against this possibility.

The themes are repeated throughout the letter: ICANN has not done enough to educate potential applicants about the new gTLD program, and brand owners think they’ve got a gun to their head.

…it has become apparent that some stakeholders in the United States are not clear about the new gTLD program. I urge you to engage immediately and directly with these and other stakeholders to better educate them on the purpose and scope of the program as well as the mechanisms to address their concerns.

I’m sure this is a letter Strickling didn’t want to send.
Recently, he talked openly about how trademark owners pressuring the US government to overrule ICANN’s decision-making risked raising the hackles of repressive regimes around the world and leading to an internet governed by the UN
Letters like this certainly don’t help his cause, but the political pressure in Washington DC has evidently forced his hand.
Will this derail next week’s launch of the program? Probably not.
Does it raise a whole bunch of questions the ICANN community had thought it had put to bed? You bet it does.
Read the letter here (pdf).

ICANN chair says new gTLD program “will run smoothly”

ICANN chairman Steve Crocker has again said he expects the new generic top-level domains program to kick off next week as planned, and that he expects it to “run smoothly”.
His comments came in a New Year email sent to the rest of the ICANN board of directors, as well as the chairs of the community’s various policy-making bodies.
Here’s an extract focusing on new gTLDs:

In terms of immediacy, the opening of the window for applications for new gTLDs is January 12, ten days from now. This is occupying a large fraction of our attention and is also the source of much attention from our stakeholders and others watching us. An enormous amount of work has gone into the program and I, among many, many others, are eager to see what will happen. The opening of the window on January 12 will be a noteworthy day, but the closing date, three months later and the publication date for the names a bit later will also be quite noteworthy. I know there is a bit of controversy over some specific aspects of the program, but I am confident the program is well constructed and will run smoothly.

The message goes on to outline two other major issues facing ICANN in the near term: the renewal of the IANA contract with the US Department of Commerce and CEO Rod Beckstrom’s imminent departure.
It also touches on broader themes, notably ICANN’s effectiveness as an organization:

We often emphasize our commitment to a multi-stakeholder model. There’s no question this is important. However, from my point of view, we are organized around broad participation from all parties because it’s a system that has worked well in the Internet ecology. And “working well” means the job gets done. If we are not effective and reasonably efficient at doing the job we were created to do, the details of our processes will matter very little. We have many processes in place to measure ourselves in terms of transparency, accountability and other attributes of fairness. I applaud and support all of these, but I would like us all to keep in mind that in addition to these very important measures that we also focus on making sure that we deliver the service our community needs.

This echoes remarks Crocker made at ICANN’s last meeting, in Dakar last October, when he stamped his authority down on the registrar community, which stood accused of dragging its feet over improvements to how it deals with law enforcement.
“If all we have is process, process, process, and it gets gamed or it’s ineffective just because it’s not structured right, then we have failed totally in our duty and our mission,” he said at that time.

Fight brewing over thick .com Whois

This year is likely to see a new fight over whether Verisign should be forced to create a “thick” Whois database for .com and its other generic top-level domains.
While Verisign has taken a deliberately ambivalent position on whether ICANN policy talks should kick off, the community is otherwise split on whether a mandatory thick Whois is a good idea.
Currently, only .com, .net, .name and .jobs – which are all managed on Verisign’s registry back-end – use a thin Whois model, in which domain name registrars store their customers’ data.
Other gTLDs all store registrant data centrally. Some “sponsored” gTLD registries have an even closer relationship with Whois data — ICM Registry for example verifies .xxx registrants’ identities.
But in a Preliminary Issue Report published in November, ICANN asked whether it should kick off a formal Policy Development Process that could make thick Whois a requirement in all gTLDs.
In comments filed with ICANN last week, Verisign said:

As the only existing registry services provider impacted by any future PDP on Thick Whois, Verisign will neither advocate for nor against the initiation of a PDP.
…
Verisign believes the current Whois model for .com, .net, .name and .jobs is effective and that the proper repository of registrant data is with registrars — the entities with direct connection to their customers. However, if the community, including our customers, determines through a PDP that “going thick” is now the best approach, we will respect and implement the policy decision.

Thick Whois services make it easier to find out who owns domain names. Currently, a Whois look-up for a .com domain can require multiple queries at different web sites.
While Whois aggregation services such as DomainTools can simplify searches today, they still face the risk of being blocked by dominant registrars.
The thin Whois model can also make domain transfers trickier, as we witnessed just last week when NameCheap ran into problems processing inbound transfers from Go Daddy.
ICANN’s Intellectual Property Constituency supports the transition to a thick Whois. It said in its comments:

Simplifying access to this information through thick Whois will help prevent abuses of intellectual property, and will protect the public in many ways, including by reducing the level of consumer confusion and consumer fraud in the Internet marketplace. Thick Whois enables quicker response and resolution when domain names are used for illegal, fraudulent or malicious purposes.

However, Verisign noted that a thicker Whois does not mean a more accurate Whois database – registrars will still be responsible for collecting and filing customer contact records.
There are also concerns that a thick Whois could have implications for registrant privacy. Wendy Seltzer of the Non-Commercial Users Constituency told ICANN:

Moving all data to the registry could facilitate invasion of privacy and decrease the jurisdictional control registrants have through their choice of registrar. Individual registrants in particular may be concerned that the aggregation of data in a thick WHOIS makes it more attractive to data miners and harder to confirm compliance with their local privacy laws.

This concern was echoed to an extent by Verisign, which noted that transitioning to a thick Whois would mean the transfer of large amounts of data between legal jurisdictions.
European registrars, for example, could face a problem under EU data protection laws if they transfer their customer data in bulk to US-based Verisign.
Verisign also noted that a transition to a thick Whois would dilute the longstanding notion that registrars “own” their customer relationships. It said in its comments:

As recently as the June 2011 ICANN meeting in Singapore, Verisign heard from several registrars that they are still not comfortable with Verisign holding their customers’ data. Other registrars have noted no concern with such a transition

ICANN staff will now incorporate these and other comments into its final Issue Report, which will then be sent to the GNSO Council to decide whether a PDP is required.
If the Council votes in favor of a PDP, it would be many months, if at all, before a policy binding on Verisign was created.

CADNA calls for mandatory .xxx-style sunrises

The Coalition Against Domain Name Abuse has asked ICANN to make one-time trademark blocks, much like those offered by .xxx operator ICM Registry, mandatory in most new top-level domains.
In a letter to ICANN bosses (pdf) sent last week, CADNA president Josh Bourne wrote:

ICANN should consider including a requirement in the Applicant Guidebook that all new gTLD registries that choose to sell second-level domains to registrants adopt a low-cost, one-time block for trademark owners to protect their marks in perpetuity.
…
ICANN should require registries to give brand owners the option to buy low-cost blocks on their trademarks before any registration period (Sunrise or Landrush) opens. This can be offered at a lower cost than sunrise registrations have been priced at in the past – this precedent has been set with the blocks offered in .XXX, where the blocks are made in perpetuity for a single, nonrecurring fee.

The recommendation is one of several. CADNA also reckons ICANN needs to name the date for its second round of new gTLD applications, and that “.brand” applicants should get discounts for multiple gTLD applications.
The letter comes as opposition to the new gTLD program in the US becomes deafening and ICANN’s board of directors have reportedly scheduled an impromptu meeting next week to determine whether the January 12 launch is still a good idea.
CADNA is no longer opposed to the program itself. Fairwinds Partners, the company that runs the lobbyist, recently restyled itself as a new gTLD consultancy.
But there’s a virtually zero chance the letter will come to anything, unless ICANN were to decide to open up the Applicant Guidebook for public comments again.
I also doubt the call for a mandatory ICM-style “block” service would be well-received by anyone other than ICANN’s intellectual property constituency.
The problem with such systems is that trademarks do not grant exclusive rights to strings, despite what some organizations would like to think.
It’s quite possible for ABC the taxi company to live alongside ABC television in the trademark world. Is it a good idea to allow the TV station to perpetually block abc.taxi from registration?
Some would say yes. The Better Business Bureau and Meetup.com, to name two examples, both recently went before Congress to bemoan the fact that they could not block bbb.xxx and meetup.xxx – both of which have meaning in the adult entertainment context and were reserved as premium names – using ICM’s Sunrise B.
With that all said, there’s nothing stopping new gTLD applicants from voluntarily offering .xxx-style blocking services, or indeed any form of novel IP rights protection mechanisms.
Some applicants may have even looked at the recent .xxx sunrise with envious eyes – with something like 80,000 defensive registrations at about $160 a pop, ICM made over $12 million in revenue and profit well into seven figures.

New gTLD failure risk bond capped at $300k

New generic top-level domain applicants will have to find between $18,000 and $300,000 per gTLD to cover the risk of their business failing, according to ICANN.
ICANN revealed the figures, which have been calculated from prices quoted by 14 potential emergency back-end registry operators, in a pre-Christmas info-dump on Friday.
The so-called Continued Operations Instrument is designed to cover the cost of paying an EBERO to manage and/or wind down a failed gTLD business over up to three years.
All new gTLD applicants must either secure credit or put cash in escrow to cover the COI, the amount of which depends on how many domains under management they anticipate.
This table shows the size of the COI for various sizes of zone.
[table id=4 /]
This essentially means that any registry that plans to grow its gTLD into a commercially successful volume business needs to find $300,000 to cover the cost of its potential failure.
Only five previously introduced new gTLDs have topped 250,000 domains under management in their first five years: .info (with 8 million today), .biz, .name, .mobi and .tel (which peaked at 305,000).
Smaller gTLDs, comparable to a .cat, .jobs or .travel, will only have to find $40,000 to $80,000. It’s likely that the majority of .brand applicants will only need to secure the minimum $18,000.
While potentially expensive, it’s welcome clarity into new gTLD funding requirements, albeit coming just two weeks before ICANN begins to accept applications.
ICANN also threw a bone to potential applicants from countries with poor access to credit.
The organization previously only contemplated allowing credit from banks with an ‘A’ rating or higher, but it now says it will accept, in its discretion, financial instruments from the highest-rated institution available to the applicant.
ICANN said it may also consider becoming a party to these credit agreements, again in its sole discretion, but that such applicants could lose points when their application is scored as a result.

Congressmen ask ICANN to delay new gTLDs

Seventeen US Congressmen have put their names to a letter asking ICANN to delay its new generic top-level domains program.
The bipartisan group was led by Rep. Fred Upton, chairman of the House technology subcommittee that held a hearing into new gTLDs last week. They wrote:

Although we believe expanding gTLDs is a worthy goal that may lead to increased competition on the Internet, we are very concerned that there is a significant uncertainty in this process for businesses, non-profit organizations, and consumers. To that end, we urge you to delay the planned January 12, 2012 date for the acceptance of applications for new gTLDs.

The letter (pdf), sent yesterday to ICANN president Rod Beckstrom and chairman Steve Crocker, goes on to note the objections of several groups, including the Coalition for Responsible Internet Domain Oversight, that have opposed the program in recent weeks.

Given these widespread concerns, a short delay will allow interested parties to work with ICANN and offer changes to alleviate many of them, specifically concerns over law enforcement, cost and transparency that were discussed in recent Congressional hearings.

It is notable that the letter was sent directly to ICANN’s top brass.
Previous requests of this kind have been sent to ICANN’s overseers in the US Department of Commerce, which has already indicated that it does not intend to strong-arm ICANN into changing its new gTLD plans.
ICANN’s senior vice president Kurt Pritz said last week that the chance of delay was “above zero”.
Whether this latest letter changes the math remains to be seen.
Opposition to the January 12 launch date in the US currently appears to be reaching a critical mass.

At-Large mulls new gTLDs U-turn

In what is likely to turn out to be a storm in a teacup, ICANN’s At-Large Advisory Committee is set to vote on a resolution calling for a delay to the new generic top-level domains program.
The ALAC, ICANN’s policy-making body tasked with representing individual end users, has been discussing a possible update to its position on new gTLDs for the last few days.
A first-draft motion, proposed by vice-chair Evan Leibovitch, said the program “would be harmful to the public interest” and requested that its January 12 launch be “suspended”.
It’s since been watered down twice, and may well be watered down further before (and if) the ALAC considers it at its January 24 monthly meeting.
The resolution currently talks about a “a deep concern about the possible harmful effect on Internet end-users of a single massive expansion of gTLDs”.
It adds that ICANN should “phase-in” the introduction of new gTLDs, “releasing no more than 25 every three months” with about a third coming from poor or community-based applicants.
It appears to be a reaction to ICANN’s newly developed applicant support program, which was weaker than many proponents of the cheaper gTLDs for worthy applicants had hoped.
Even in its current form, the resolution is attracting much more opposition than support from members of the At-Large, so it seems unlikely that it will go anywhere.
To advocate for a phased approach to new gTLDs, or to recommend a delay, would represent a huge U-turn from the ALAC’s existing position.
In 2009, the group said supported “the expedient introduction of new gTLDs” and that it did not believe a “trial run” with a limited number of applications was appropriate.
Still, there’s nothing wrong with changing one’s mind as new evidence comes to light, of course.

New gTLD industry pleads with senators

Twenty-eight domain name industry players have written to two influential US senators in support of ICANN’s new generic top-level domains program.
Calling it “innovative and economically beneficial”, the letter takes issue with third-party claims that the program was “rushed”, pointing out that it took a long time and lots of people to develop.

Since the formation of the multi-stakeholder Internet governance, no process has been as inclusive, and no level of outreach has been as far-reaching as the one facilitating discussion of namespace expansion.
…
While new gTLDs will experience different levels of end-user adoption, we optimistically anticipate the useful possibilities for new services and applications from the namespace, the positive economic impact in the United States and globally, the inclusion of developing nations in Internet growth and development, and the realization of the hard work and preparation of the thousands of interested stakeholders dedicated not only to their own interests, but that of the global Internet.

The letter (pdf) was signed almost exclusively by registrars, registries, applicants and consultants; with one or two possible exceptions, all companies that stand to make money from new gTLDs.
It was sent to Sen. Jay Rockefeller and Sen. Kay Bailey Hutchison, chair and ranking member of the Senate Commerce, Science and Transportation Committee.
That committee held a hearing into new gTLDs two weeks ago during which Rockefeller expressed cautious support for the concept, saying he was in favor of competition.
The letter is dated December 8, the day of the Senate hearing.
A similar hearing in the House of Representatives last week resulted in two Congressmen sending a letter (pdf) to the Department of Commerce requesting a delay to the program.

Chance of new gTLD delay “above zero”

ICANN has not completely ruled out the possibility that its new generic top-level domains program will be delayed, according to senior vice president Kurt Pritz.
Pritz was asked during a meeting of the GNSO Council last week whether the recent Congressional hearings into new gTLDs could lead to a delay of the January 12 launch.
“I think the risk is above zero,” Pritz said.
An “above zero” risk of delay could still mean a very small risk, of course.
He went on to point out that “the reputation of the multi-stakeholder model is wrapped up in this too”, and that to delay would be a disservice to all the people who have worked on the program.
He noted that the National Telecommunications and Information Administration assistant secretary Larry Strickling has come out in strong support of the multi-stakeholder model.
While the NTIA does not plan to enforce a delay, ICANN itself could make the decision under political pressure from elsewhere in the US, such as from Congress or the Federal Trade Commission.
Pritz faced a rough ride during a House Energy and Commerce Committee hearing last week, during which a number of Congressmen said they believed delay was appropriate.
The committee was largely concerned about the possible costs to trademark holders and implications for law enforcement agencies.
The hearing was called following lobbying by the Association of National Advertisers and the Coalition for Responsible Internet Domain Oversight.

UDRP reform put on hold for four years

ICANN’s cybersquatting rules, including the Uniform Dispute Resolution Policy, will be reviewed and possibly reformed, but probably not until 2016 at the earliest.
The Generic Names Supporting Organization Council voted last Thursday to put the start of UDRP reform on hold until 18 months after the first new top-level domains go live.
The review will also take into account other cybersquatting policies including Uniform Rapid Suspension, which will be binding on all new gTLD registries but has yet to be be tested.
This is the relevant part of the resolution:

the GNSO Council requests a new Issue Report on the current state of all rights protection mechanisms implemented for both existing and new gTLDs, including but not limited to, the UDRP and URS, should be delivered to the GNSO Council by no later than eighteen (18) months following the delegation of the first new gTLD.

An Issue Report is compiled by ICANN staff and often leads to a Policy Development Process that creates policies binding on registries, registrars and ultimately registrants.
Because the first new gTLDs are not expected to be delegated until the first quarter of 2013 at the earliest, the Issue Report would not be delivered until half way through 2014.
After ICANN public comment and analysis, the GNSO Council would be unlikely to kick off a PDP until the first half of 2015. The PDP itself could take months or years to complete.
In short, if UDRP is going to be reformed, we’re unlikely to see the results until 2016.
The Council resolution, which was in line with Governmental Advisory Committee advice, was proposed by the registries, following many months of ICANN public outreach and discussion.
Non-commercial users in the GNSO were most strongly in favor of an accelerated timetable, but a request to reduce the 18-month breather to a year failed to find support.
The Intellectual Property Constituency had proposed an amendment that would have kicked off the process after 100 UDRP and 100 URS cases had been heard in new gTLDs, rather than after a specified time, but the motion was defeated.