Minds + Machines

IBM’s submission to ICANN’s comment forum on the fourth version of the Draft Applicant Guidebook — the set of rules for getting a new top-level domain, implies very heavily that they will be applying for .IBM. Furthermore (no surprise) it looks as if they will use it for internal purposes, and not to sell any .IBM names to the public.

First, IBM is pleased that there will be no requirement for a sunrise period, which wouldn’t make any sense if the top-level domain were used for internal company purposes, and not sold to the public:

Second, IBM notes that as yet there is no requirement that .brand top-level domains must use registrars — again, something that makes little sense if you’re just registering names internally. (This issue is currently being hashed out by the Vertical Integration Working Group, which is in a deadlock.)

Taken together, these comments are strong evidence that IBM is, at a minimum, giving serious consideration to applying for .IBM. Canon has already announced their intention to apply for .CANON. It appears that IBM and others are set to join them soon.

It Depends

Economists aren’t very good at predicting things, as any one with money in the stock market can attest. The most powerful economist in the United States, the Chairman of the Federal Reserve, is on record predicting a continuing climb in housing prices — just prior to their precipitous decline. And yet their crystal balls still hold some allure for those who need to present “evidence” about the future. Such is the case with ICANN and the new gTLD program.

The latest economic report to be presented to ICANN uses a great number of pages to say very little. It tells us that gTLDs may be useful, or they may be harmful — it depends. We are told that cybersquatting may increase, or not — it depends. We learn that registries might make money, or they might not — it depends. To our astonishment, we learn that sometimes things are good for some people, but bad for others.

The whole report could have consisted of this one paragraph, which contains the entire wisdom of its contents:

“Because business model innovations are difficult to predict, experience with the development of gTLDs that serve specific communities is limited, and the community has no experience with IDNs at the TLD level, it is difficult to describe the expected effects of new gTLDs with precision.”

In other words, it depends.

Why Do We Even Have This Economic Report?

ICANN has produced many economic reports. Each time, someone objects to the results, and insists ICANN do another one, hoping for a different result. This is not as ridiculous as it might first appear, because two different sets of economists are entirely capable of coming up with wildly disparate results. In this case, the economic study is mandated by the Affirmation of Commitments. So ICANN is obliged to do it, which makes it obligatory, if no less fatuous.

The Language of Imprecision

The authors were handed an impossible task: predict what going to happen, in both an economic and social dimension, if we do something that has never been done before. With consummate professionalism, however, they were equal to the task, employing two effective strategies. First, they used the bulk of the report to review the history of the gTLD program, other surveys and opinions, and different theoretical frameworks for quantifying economic predictions. Second, they predicted various possible risks and benefits, without quantifying any of them — the words “may” and “might” appear 128 times, or roughly twice per page.

Something for Everyone

By saying that new gTLDs might be good, or might be bad, or possibly even a mix of the two, the authors gave both proponents and opponents something to cheer about, which has muted opposition to the report itself and has instead resulted in the two sides brandishing excerpts from the report, each for its own benefit. But the professionalism of the authors shows through: their most important recommendation is that the new gTLDs will provide data for — wait
for it — another study.

I commend the authors for taking money from ICANN, and for setting themselves up for more work later, and for producing a document that looks entirely professional, while saying nothing more than “it depends.” They were given a dubious task, and performed it to the hilt.

Should observers of ICANN lend any credence to this study? If your goal is to advocate a position without any empirical evidence, it is an excellent tool. If your goal is to understand what the new gTLD program will produce, it will, if printed out and bound, make a splendid paperweight.

In other words, it depends…

(Adapted from a post made to ICANN’s comment forum.)

ICANN’s 38th get-together, in Brussels, may become known as the meeting where the dust finally began to settle. Long-standing issues were settled, compromises were reached, no-one complained too much about the latest version of the Applicant Guidebook, and the Board stood by its project plan dates, even scheduling a Board retreat to solve remaining issues. Finally, there were no surprise “gotcha!” delays that gTLD applicants have been used to seeing at ICANN meeting. With one possible exception…

September Board Retreat – Good News

ICANN’s Board of Directors is going to take a special retreat, tentatively scheduled for September 2010, to try to sort out the remaining gTLD issues. This was publicly announced by Chairman Peter Dengate-Thrush and much discussed during the Brussels meeting. It is likely that the Board will hammer out some solutions on issues where opposing camps are insisting on their advantages and refusing to compromise.

The Board seems to be taking their task seriously, putting enormous pressure on various working groups (see my notes on the vertical integration working group, below) to produce proposals prior to their retreat. Applicants should be pleased with the vigor with which the Board has decided to address the remaining logjams.

.XXX Decision – Good News

The Board’s decision to green-light .XXX means new gTLD applicants can breathe a sigh of relief. The approval means that the new gTLDs program will not be threatened by .XXX-inspired court interference in the gTLD process. ICM Registry, .XXX’s sponsor, would almost certainly have sued ICANN if the decision had gone differently, and very likely they would have asked for an injunction to stop the introduction of new gTLDs — and they might have been successful. The ICANN Board decision to go ahead with .XXX, however heavily hedged with caveats, removes this threat. That’s good news for gTLD applicants.

Most of the press I’ve seen makes it seem as if .XXX is a done deal, and will be inserted into the root in short order. Unfortunately for the 162,000 reported pre-registration applications for .XXX, we are very far from that. One of the more intelligent analyses of the Board’s resolution is theTom Hymes story at AVN. To their credit, ICM’s blog has a thorough and fact-filled rundown of the remaining obstacles. My own assessment of .XXX isn’t very positive, but it is a good sign that ICANN is letting itself be compelled to following its own rules.

Intellectual Property Issues – Good News

Trademark advocates at ICANN will tell you that they are the reasonable ones, that the people who are unalterably opposed to new gTLDs don’t even show up at ICANN meetings. That may be, but members of ICANN’s intellectual property constituency have hardly been pushovers. Therefore it was a pleasure to witness hardline opponents to new gTLDs, including sharp critics from the BBC, Nestle, and the American Red Cross talk constructively about how they could benefit from them at a panel called “Brand Management in the Age of New gTLDs.”

For instance, Charlotte Walters of Orange (the phone company) had this to say:

I think we’re all about building and driving brand value, in which case if you have an asset that could become a mark of value and a mark of quality so that consumers would come to recognize that something that is dot Orange is genuine and that there is no risk of phishing or any other malicious acts underneath it, then that would be the ideal position that we are all aiming to get to. The question is, how long does it take you to get there.

In the meantime, I think that defensive registrations, which we’re all used to doing, is going to be an ongoing factor….

So on a longer-term view, yes, it — there is a lot of potential value. And from a marketing perspective, there’s a lot of potential value. But it will take a long time, I think, to educate internally and externally as to how to get there.

The intellectual property people fought hard for their position and achieved enormous gains, and now there is a sense that they should take their winnings quietly, which they seem to be doing. There are now several RPMs (rights protection mechanisms) in the Applicant Guidebook, including measures to shut down entire registries if they were found to be knowingly and systematically violating IP rights. The GAC (Government Advisory Committee) is no longer worrying that the sky will fall without more IP protections, and the Board opines quite openly that they see consensus in this area. Strident denunciations will continue, but at the meeting there was overwhelming agreement that we are finally past this hurdle.

Vertical Integration – Good News

The good news — and it is good news — is that the Vertical Integration Policy Development Process (VI PDP) is not going to delay new gTLDs. That doesn’t mean the results won’t affect new gTLDs, but it’s not going to slow things down.

Vertical Integration is another way of saying cross-ownership or control, and in this case the question is whether (and to what extent) a registry can own or control a registrar, or vice-versa. The Working Group (which I participate in) has a wide variety of entrenched positions, ranging from protectionist limitations on cross-ownership to a registrar-pleasing complete lack of barriers. The arguments are arcane, and because the limitations concern a future marketplace that no-one can really grasp, the proceedings are an anxious pandemonium of fears and doubts. But the Board has insisted on getting some kind of report in time for its retreat, and so the Working Group is likely to produce a very thin document that representing whatever consensus the group can achieve. The Board doesn’t want to decide this question on its own, but if it must, it will.

You can access the Working Group’s online resource page, or for a long slog you can read the Working Group’s email archives. A few weeks ago, I took the trouble to articulate the Minds + Machines position, which remains the same.

MOPO – Theoretical Knot with a Real-World Solution

MOPO, also called MAPO, stands for “Morality and Public Order,” which is the last big sticking point. Most did not consider it that big of an issue until this Brussels meeting, when the GAC first declared that ICANN’s whole approach to ferreting out immorality (having jurists decide if a TLD is immoral) was not acceptable and must be changed. They subsequently declared it was not their job to suggest anything in its place. Predictably, ICANN board members and staffers were annoyed, but must realize that ultimately they have to produce something that the GAC can live with. Watching the meetings, I didn’t sense that the GAC was using this as an issue to slow down new gTLDs; on the contrary, they seemed not to want to be seen as the reason for delay.

On the one hand, the GAC is right: the morality and public order module is a mess, bulked up with portentous phrases but basically passing the buck to some highly paid lawyers. On the other hand, the module fails precisely because it’s impossible to determine what’s immoral or not on a global basis — this is a circle that will not be squared. The debate is reminiscent of the struggles of the U.S. courts to define pornography, and the solution that was reached — local community standards — will serve here too.

A practical fix is needed, even if it doesn’t address the underlying (insoluble) problem. My guess is that, despite its overtones of censorship, ICANN will have to set up some kind of morality panel in judgment of names, and people it with diverse enough stakeholders to deflect claims of conspiracy. And the vast majority of TLDs will pass without a whisper of dissent. This panel will be just another objection chokepoint, joining the Independent Objector, the Geographic Names Panel, Community Objection and other procedures as a gateway that gTLD applications will have to pass through. Meanwhile, out in the real world, local jurisdictions may block some gTLDs locally if they find them offensive — just as they now block certain second-level domain names in .com.

Although MOPO is the most concerning of the remaining obstacles to opening the new gTLD process, and does have a chance of slowing down the process, there are a lot of committed people working on a solution. The real difficulty will be to shoehorn the practical solution into a theoretical framework that’s consistent with the principles everyone is keen to display.

The Bottom Line

The final shape of the applicant guidebook is becoming clear. With the possible exception of the MOPO issue, solutions to the remaining problems are visible in outline and in many cases in great detail. There are several efforts underway, including the Board retreat and various hurry-up working groups, to get the new gTLD program to the finish line. There’s always a chance that the timing will slip, but I would say not by much — we’re sticking to our timeline: most indications are that ICANN’s next meeting, in early December 2010 in Cartagena, Colombia, will finally produce a starting date for new gTLDs.

One of the pluses of being a veteran of ICANN meetings is the ability to pare down the schedule to what is relevant for our business plans. Minds + Machines will be focused on new gTLDs in Brussels. Following are my circled-with-a-big-red-pen session suggestions for those interested in new gTLDs.

Saturday, June 19

• 15:00 – 17:00 – The Government Advisory Committee (GAC) will discuss developments in the New gTLD process, including the latest Draft Applicant Guidebook (DAG 4), TLD categories, and geographic names. Many of the changes in DAG 4 are the direct outcome of GAC recommendations. If you want a preview of how the rest of the week will play out, don’t miss this meeting.

Sunday, June 20

The Generic Names Supporting Organization (GNSO) has two working sessions on New gTLDs.

• 09:00 – 10:15. Start the day observing the Vertical Integration PDP Working Group meeting with the GNSO Council. At the ICANN meeting in Nairobi, the Board pushed the community to resolve the debate on cross-ownership of registries and registrars by instituting a zero percent cross-ownership rule. This resolution disrupted some high-profile business plans. However, the Board will consider an alternate policy from the GNSO if one is created prior to the launch of the new gTLD program. Nearly 100 community members have participated in the Working Group to formulate a new policy.
• From 14:00 – 17:00 is the GNSO’s New gTLD Working Session. The GNSO will also be briefed on DAG 4 by Kurt Pritz, ICANN’s Senior Vice President.

Monday, June 21

Though some very important work is done during the three previous days, the meeting officially opens on Monday, June 21. If you are interested in the technical side of TLDs, drop in on the ccTLD Tech Day, where registry operators discuss implementing the latest standards and share experiences.

• 15:30 -17:30. Kurt Pritz will take the stage to brief the entire community on the status of the New gTLD program, the highlights of DAG 4 and — not to be missed — an accounting of the remaining open issues.

Tuesday, June 22

• 10:00 – 11:00. The new gTLD highlight on the schedule for Tuesday, a.k.a. “Constituency Day,” is the GAC’s discussion of Morality and Public order, a remaining overarching issue. Attend if you want a glimpse of how this issue could play out.

Wednesday, June 23

• 12:30 – 14:00. Update on Vertical Integration.
• 16:00 – 17:30. A panel discussion on “Reducing Barriers to New gTLD Creation in Developing Regions.” Board Resolution 20 in at the last ICANN meeting in Nairobi requested that the community “develop a sustainable approach to providing support to applicants requiring assistance in applying for and operating new gTLDs.” Working Group members will announce several proposals for consideration. Some of the proposals will be controversial as there is a requirement to recover the costs of new gTLD applications and on-going services to new gTLDs. Applicants, registry service providers, and incumbents will all benefit from attending this session.
• 16:00 – 17:30. Next door, at the same time, panelists will discuss “What brand protection and management measures entities need to consider before, during, and after the launch of the new gTLD program.”

Thursday, June 24.

• 13:30 – 18:00. You can sleep in Thursday morning, because the important public forum is scheduled for the afternoon. This is the time to speak your mind and ask questions directly to the Board before they lock down and decide how to vote on the issues Friday.

The schedule does change leading up to and throughout the meeting, so be sure to double-check the full schedule every morning to confirm dates and times.

Minds + Machines will have multiple representatives at the ICANN Brussels meeting, and we’d be glad to meet with you about our registry services, or just point you in the right direction. You’ll recognize us by our Minds + Machines lapel pins.

I’ve been reading through some of the raft of documents ICANN released earlier this week. Among them is ICANN’s New gTLD Program Budget, which contains good news for new gTLD applicants.

ICANN reveals that it expects just 5% of applications to fail the initial evaluations, and another 5% to request refunds prior to the end of the evaluation stage. This means that they’re intending to pass approximately 90% of the applications — in other words, ICANN’s intent is not to fail applications by finding trivial faults, but rather to simply make sure that they’re operationally and financially sound. That is excellent news.

ICANN also reveals what it expects from the gTLD application round. Among the highlights:

• ICANN estimates 500 applications. The don’t estimate the number of duplicate or conflicting applications, but if we suppose that 25% are in conflict, that would leave us with approximately 425 unique TLDs applied for. Subtracting a further 10% who drop out, that leaves 382 new TLDs that we can expect to see delegated.
• ICANN expects the majority of gTLD applications to be “straightforward,” with no need for complicated and time-consuming procedures. More good news for applicants.
• ICANN expects the Independent Objector to file objections in less than 5% of the total applications. Again, ICANN’s intent does not seem to be to find fault.

It’s good to see these numbers from ICANN, which shows that they want their program to succeed with a full complement of new gTLDs. 382 of them, by my reading.

I’m guessing that few people have bothered to read the gTLD Registry Transition Processes document, which came out earlier this week, along with the Draft Applicant Guidebook (DAG) Version 4. Its name promises a very boring recitation of things to do when a registry needs to make a transition, which is of interest to no-one just yet because ICANN hasn’t even started the process to create any of the new registries that might one day be transitioned.

And yet there are in it some eye-opening clues about how ICANN is going to try to regulate the new gTLDs.

The document opens with a portentous recounting of ICANN’s core values, specifically “Core Value #1,” which is “preserving and enhancing the operational stability, reliability, security, and global interoperability of the Internet.” The idea is that if a registry changes hands, the transition must be undertaken in a way that Core Value #1 is preserved.

So far so good. But once we move past this catechism, we find that the document is just as concerned with preserving and extending the political levers that have been gradually inserted into the DAG over the last year. We find that “transition” means not just changing ownership, or wholesale replacement of the back-end registry, but also very minor things like name changes or small parts of outsourced technical services, and that any changes might need approval of third parties, including governments. It introduces dangerous consequences for any breach (even minor) of the Registry Agreement, including an entire re-evaluation of the registry similar to the initial application process. New “Emergency Operators” will be contracted to take over a registry in the case where ICANN determines that there’s a problem. And all of this will mean new fees and new bureaucracy.

Here is ICANN’s matrix for the kind of evaluation will be required.

In more detail, this is what registries of new gTLDs can look forward to:

Name Change

If the registry wants to change its name, it will be re-evaluated to “ensur[e] it is legitimate to guarantee there is no opportunity for hijacking the TLD.” The language is symptomatic of ICANN’s attitude to applicants, which is to treat them as potential scoundrels. This is in marked contrast to its attitude toward some government players, who are actual, verifiable, proven scoundrels (see “IDN ccTLDs for corrupt states, fast-track process for”). I am not sure what “hijacking the TLD” might mean, and the document does not explain. Suffice it to say that changing your name from “123 Inc.” to “1234 Inc.” will bring ICANN’s suspecting scrutiny upon you.

Sale of Registry

Selling your registry will now be more like selling your co-op in New York City. It’s not enough to find a buyer; you have to convince the Board of the buyer’s worthiness. The Board will put the buyer through the same wringer that you went through as an original applicant, with the same level of fees, and they can turn down the buyer for any number of reasons. There will be an evaluation of fitness from a technical, financial, and “due diligence” perspective. This last category is not defined but presumably refers to the new extensive background check. There is as yet no objection process for governments or the IP lobby to air their fears, but I would be surprised to not see this coming in further iterations of this document. One effect of this policy will be to make a sale to an existing player much easier than to a new entrant, thus concentrating commercial power and discouraging competition.

Fees

Each new owner (even if it’s the same one, with a new name) will have to go through some evaluation process. Every 3rd-party evaluator has to be paid. ICANN does not specify the dollar amounts, but I wouldn’t look for a bargain here. A full-on evaluation could easily run into the hundreds of thousands of dollars.

Geographical TLDs

In a sale (or even, apparently, for a simple name change) the new owner will have to gather the same governmental support or non-objection letters that the original applicant did. Effectively, the relevant government(s) will have veto power. In addition, despite language that creates a presumption of renewal of registry contracts at the end of the contract term, governments are now given the power to withdraw their support of the current registry in favor of another. Normally I would congratulate government officials on their sudden access to season tickets, expensive lunches, and access to no-show jobs should they ever leave the employ of the people, but in fact the model that ICANN supposes is unlikely to exist: I believe that in just about every case it will be the government who holds the delegation to geographical TLDs, and they will hire out the technical functions, preserving their power to do whatever they want, whenever they want.

Community TLDs

Running the registry for a community TLD just got much worse. ICANN’s new rules insert the nebulous concept of “community” directly into the operational life of the registry, instead of just the policy aspects. So, if you are the registry for a community TLD and want to change your name or move to a new back-end provider, your community must be “consulted.” No mechanism is specified about how to consult a community, so chaos is invited. I wonder what consulting the community of Harley Davidson enthusiasts looks like…

Registries in Breach of Contract

A registry may find that ICANN decides that it is in breach of its registry agreement with ICANN. This breach could be because of non-payment of fees, excessive downtime of the WhoIs server, or whatever. If it is uncured, a re-evaluation will follow before the registry is allowed to resume operations. The re-evaluation may include recertification by a government, approval by a relevant community, and other “due diligence” items. It’s just like applying for the first time.

Emergency Back-End Registry Operators

Here is a new beast, the Emergency Operator. Aspirants for this position will fill out an RFP and if they are chosen will be paid to be on stand-by until there’s an emergency, at which point they will be paid to be emergency responders, which ICANN “expects” will be on a cost-recovery basis. They are for the case where a registry can’t perform its functions properly. It’s a good idea in theory, but I wonder what exactly a third party can do in an emergency. A registry has two essential functions: the register (the list of names and associated data) and the resolution (DNS). There are other functions such as a WhoIs server. In this era of hyper-redundant anycast DNS I don’t see resolution being much of an issue. As to the register function, if it’s screwed up, it’s likely to be because of bad processes and bad record keeping, which lead to bad data, and this is not really fixable in an emergency; the whole thing needs to be checked and rebuilt. These new Emergency Operators will have to enter into contracts (“lightweight contracts,” ICANN suggests) with the registrars of the existing registries for which they are backups, creating a whole new layer of bureaucracy. I understand the idea, but wonder if the cure might be worse than the disease.

Summary

The Registry Transition Processes document is a clue to what it’s going to be like to run (or sell) a registry under the new ICANN regulatory regime. For the first time there is a semi-official recognition of the back-end registry operator; there are new colo-rectal exams whenever there is acquisition or other change in corporate structure; there are new fees; and there is an expanded role for governments, whose mission-creep is seen in all areas of ICANN these days.

One effect of this new regime will be to create heavy incentives for registries to stick with whatever back-end registry provider they happen to have. It’s not quite lock-in, but it’s close, because choosing a new one will carry significant costs and risks. The big winners here are the providers of back-end registry services.

If you’re thinking of applying for a new gTLD, you should familiarize yourself with the full document, and comment on it, because it’s going to be important for the life of your registry after delegation.

Today ICANN released it’s latest version its Draft Applicant Guidebook (DAG) for new generic top-level domains. It’s been 9 months coming; DAG3 appeared in the fall of last year. Compared to DAG3, there are only minor changes (see the redlined version of the document). Overall we are satisfied with the new DAG, as we were with the previous version, which came out nine months ago.

There are few substantial changes from the previous version, which is good news. It suggests that we are almost at the end of this process, and provides an indication that this will be the final DAG before the Final Applicant Guidebook.

The major changes (which really aren’t that major) are as follows:

• An expanded role for public comment (Section 1.1.2.5), which is a wide-open back door for objections to applications which pass all of ICANN’s objective criteria, but are still not liked by the various powerful interests that have held up this process for so long. In this way ICANN can claim to have an objective process while leaving an avenue open for meddling in case something “objectionable” gets through. It’s not a stretch to presume that the .XXX fiasco was on the minds of ICANN as this was drafted.
• Cross-ownership of registry and registrar (Section 1.2.1). This version of the DAG has strict separation between registrar and registry, but with a footnote saying this is open to change if the “community” comes up with a better solution. The “community” now discussing this is the Vertical Integration Working Group, which consists almost wholly of registrars and registries aiming competing proposals at each other. The proposals vary in their details but are uniform in giving short shrift to idea that might help the consumer, but very thorough when it comes to advocating what might help the proposer. It is likely that in the final applicant guidebook we will see some limited cross-ownership possibilities, fine-tuned to please incumbent players.
• $5000 of the $185,000 fee is now due when registering to apply (Section 1.5.1). Applicants will create a new registration for each TLD they plan to apply for, and will have to pay $5000 for the privilege. The remaining $180,000 is due with the application itself.
• An expanded background check for applicants (Section 2.1). As well as the usual things that can disqualify a person or entity from running a piece of public infrastructure (corruption, bribery, terrorism), ICANN has added another great evil of our times, “intellectual property violations.” If for some reason you don’t think that intellectual property violations rank with terrorism in the pantheon of Bad Things, please have a chat with ICANN’s Intellectual Property Constituency, who will set you straight. For extra credit, ask them who was behind this amendment and watch for expressions of astonished innocence.
• Some small changes to the treatment of geographical names (Section 2.2.1.4.2). The DAG is now explicit that if you want to do apply for a gTLD for the capital of a country (e.g., .cairo) you will have to get the permission of the national government.
• Use of zone files (Section 2.2.3.3). If you want to do a TLD that makes innovative use of the DNS (as .TEL did), you will now have to ask for special permission from ICANN, who will check to make sure that your plan won’t harm the stability of the DNS system.
• Incorporation of IRT recommendations (e.g., Section 5.4.1). Parts of the recommendations of the Implementation Recommendation Team (IRT) have been incorporated into the DAG, including the Uniform Rapid Suspension requirement.

Overall, this version of the Draft Applicant Guidebook differs from the previous version by adding some incremental changes and extra back doors for fidgety governments and the IP interests who lobby them. None of the changes are unexpected or especially egregious. We are satisfied with the new document, and hope and expect that ICANN will move expeditiously to issue a final guidebook with application dates and final rules.

ICANN Board Member Bruce Tonkin gave a good post-Nairobi webinar (signup required) last week. Among other things, he gave his sense of the timeline going forward, which accords with our own estimate, which we publish below.

This is ICANN, so further delays are always possible. If ICANN is able to make the progress it thinks it can on the remaining open issues, however, the timeline below looks reasonable. Also available for download as a PDF.

Minds + Machines’ parent company, Top Level Domain Holdings (AIM: TLDH), today sent out a press release summarizing our take on the recent ICANN Nairobi meeting from the TLDH perspective. The full text follows:

On Friday, 12 March 2010, at a meeting in Nairobi of the Internet Corporation for Assigned Names and Numbers (“ICANN”), ICANN’s Board of Directors clarified and progressed further the framework for the introduction of generic top level domains (“gTLDs”).

The ICANN Board resolved that there should be no cross-ownership between domain name registries and registrars. This prohibition will prevent existing ICANN-accredited registrars from owning or operating new gTLDs, thus limiting the number of prospective applicants. This continues a trend of increasing the barriers to application for non-experts as ICANN adds additional requirements and restrictions to the framework for the introduction of gTLDs. TLDH is unaffected by this policy and the Board of TLDH therefore expects that TLDH will benefit from this continuing separation between registrars and registries.

The ICANN Board also resolved that ICANN should focus on the full introduction of gTLDs later this year rather than implement an intermediate step by adoption of the Expressions of Interest/Pre-Registrations Proposal. The ground rules for application for new gTLDs are expected to be published by early summer 2010. Accordingly, as ICANN approaches the point where it will be able to proceed with full applications, the Expressions of Interest (“EoI”) program becomes unnecessary. ICANN staff reported during the Nairobi meeting that the next draft of the Draft Applicant Guidebook, expected to be issued in June, will be near final, and subject only to a final comment period.

While we were supportive of the EoI proposal, we welcome ICANN’s focus that the main objective should be to speed up the gTLD process, and the intermediate step of EoIs is unnecessary if ICANN is close to resolving the final details prior to the launch of new gTLDs.

With our substantial cash resources, low operating costs and our significant interests in prospective applicants for .eco, .nyc, .berlin, .bayern and .gay amongst others, and also with the restriction on competition that has been placed on existing registrars, we believe that TLDH is well positioned ahead of the start of the gTLDs application and award process.

Following the ICANN Board meeting, Rod Beckstrom, ICANN’s chief executive, provided further details on the gTLD process, which is available on-line at http://bit.ly/buru8z.

I regret that the posts on our blog are getting more and more specialist, but I don’t apologize. As things come to a head for new gTLDs, we are getting through the final details, which have become proxies for the larger battle. So it is with Expressions of Interest.

Here at the ICANN Nairobi meeting, I’ve heard some talk from people in the non-commercial constituency — usually an ally in getting new gTLDs approved — about how Expressions of Interest (EOIs) may be harmful to small registries. To be honest, I have a hard time fathoming the objections, because it seems to me that EOIs are extremely helpful to small registries. In fact, EOIs may be the only way they can survive the ICANN process.

(Expressions of Interest is the process where companies who want to apply for new gTLDs will have to submit their new TLD name, their contact details, and a check for $55,000, which will be counted toward the final $185,000 application fee. The process is mandatory, and the purpose is gather information on the applicant pool so that ICANN (and the technical operators of the Internet) can gather the data they need to take applications and prepare to delegate the new gTLDs. At the end of the process, all the information will be published, and only those who put in an EOI submission will be allowed to apply.)

“Small registries” mean primarily cultural-linguistic communities, for instance the already-announced .BZH (Brittany), .GAL (Galicia), and .EUS (Basque community). (It does not include city TLDs, which are “geographical TLDs” with special rules.) Each of these small registries has a community of several million, which during the first few years of operations will translate into a registry that contains less than 100,000 names. This is based on .CAT (Catalonia), which started several years ago and at present has about 40,000 names in their zone. There is an assumption, which may or may not be warranted but which we can all accept, that there may be others of a similar type. There is also general agreement that these sorts of registries are valuable to the DNS and should be helped wherever possible. Therefore the argument that EOIs would hurt these registries is of special concern.

So what are the arguments being advanced on behalf of these registries against EOIs?

1. That the $55,000 is too expensive and disproportionally hurts small registries
2. It will be hard for small registries to raise $55,000 and then later go raise another $130,000, and it will be hard to raise it by the EOI start date (August 2010 at the earliest)
3. That having to reveal one’s identity will give powerful actors more time to object
4. That EOIs, by adding a step to the process, will slow down the gTLD process

Of these, only the last one has any merit, but even if it’s true (which I don’t believe), it still helps small registries. Let me address the objections and show why they don’t make sense.

1. $55,000 is expensive, to be sure, but that’s a “feature” of the new gTLD program as a whole, not the EOIs. Overall, the $185,000 filing fee has not changed, it’s just that some of it is due earlier. Considering that ICANN had originally contemplated introducing new gTLDs in early 2009, it cannot be considered “early” at all. Furthermore, the real cost to small registries is keeping their operations going while they wait for the seemingly endless ICANN process to finish, not to mention the extremely demoralizing uncertainty about whether it will happen at all. When the EOI process finishes, and small registries know that they have a guaranteed and protected application “slot,” they will be much better off, because they will know that the process is happening and they will have some clarity around milestones and (hopefully) the re-establishment of a timeline.

2. Perhaps we can chalk it up the fact that non-commercial interests almost by definition aren’t experienced in raising money for commercial ventures, but almost any business person will tell you that the less risk you have, the easier it is to raise money. EOIs remove a very significant element of risk. When the EOI results are announced, most of the small registries will be guaranteed that they are the only applicant for their string (it is unlikely that there will be two applications for .GAL, for instance). That makes it *much* easier to raise money. The EOI submission date will also be a deadline – another very helpful element in raising money. Finally, because the entire $185,000 fee is known in advance, they will not need to go back to their funding source with a “surprise” second round, it will be plain to see from the outset.

3. Suppose that the Tamil people wanted to do .TAMIL, and faced the objection of the Sri Lankan government, who have just concluded a terrible and bloody war against Tamil separatists. Because EOIs occur earlier (the argument goes), it would give the objectors more time to prepare their case. This argument flies in the face of reality — and the ICANN process. The objection process (which will occur after the TLD application is submitted) will already take many many months, plenty of time for objectors to marshall their arguments. Whatever additional time is given to objectors, is also given to applicants — to either counter the objection, or to work out an arrangement. Finally, the ICANN process is not set up to put in “hidden” applications: for an application to succeed, it will have to overcome objections, it can’t try to sneak past them.

(I should note that brands who oppose new gTLDs have seized on this last argument and are evincing a a new and touching solicitude for the fate of politically sensitive small registries. Would that have anything to do with the fact that brands themselves don’t want to be forced to show to the world that they are busy planning their new gTLD applications even as they try to wreck the process?)

4. EOIs do add a step in the process, but it shouldn’t take more time, since things are all proceeding concurrently. Even if it does add months to the process, which I doubt, that is more than compensated for by the fact that EOIs add clarity, certainty, and something concrete that applicants can show their investors, their community, and their shareholders.

The proof of the pudding? In the ICANN EOI comment period, small registries supported EOIs. And all applicants, large or small, rich or poor, community-based or entrepreneurial, want this process to be predictable, orderly, and certain. For some small registries, their survival depends on it. EOIs provide all of that and more.