GAC Concedes on Second Level Geo-Domains – While Telling ICANN That New gTLDs Need Far More Study

While the comment period on Version 2 of the Draft Applicant Guidebook (DAG) on new gTLDs officially closed on April 13th (see article
for ICA’s comments) ICANN’s Governmental Advisory Committee (GAC)
weighed in with a 7-page letter dated August 18th (available at http://www.icann.org/correspondence/karklins-to-dengate-thrush-18aug09-en.pdf).
Despite its tardy submission, ICANN is unlikely to disregard this
consensus statement by national governments and intergovernmental
organizations.

From the ICA perspective, the document’s most significant feature is
the apparent GAC retreat on its prior insistence that second level
geo-domains in generic gTLDs be subject to requirements for
governmental endorsement or non-objection. ICA has consistently taken
the position that ICANN had already conceded too much to the GAC in
regard to geo-names at the top level and that extending government
control to second level names at generic gTLDs (e.g., france.cuisine,
tahiti.islands, etc.) would interfere with consumer search and cripple
the utility and prospects of new gTLDs (see, for example, ICA’s oral presentation to the ICANN Board in Sydney).
While the GAC letter suggests two DAG amendments regarding geographic
names at the top level, it is silent regarding them at the second level
– which we interpret as indicating a strategic retreat on that front.

While that omission is music to ICA’s ears, the remainder of the
letter likely struck a sour note with ICANN. It clearly conveys an
overall lack of enthusiasm at the prospect of unlimited expansion of
the gTLD space, noting instead the importance of “controlled and
prudent expansion” and suggesting twice that a “more measured rollout”
might be the wiser course.

Other salient points of this letter include:

•    Contending that ICANN’s reports on competition and price caps “had
not provided appropriate answers” and “have failed to distinguish
adequately between real demand and derived demand”, noting that the
“GAC remains concerned that the threshold question has not been
answered whether the introduction of new gTLDs provides potential
benefits to consumers that will not be outweighed by potential harms”.

•    Noting an “urgent need for separate empirical research …regarding
the costs of defensive registrations and the impact on consumers” and
recommending extensive new empirical studies, interviews, surveys, and
other data gathering and analysis activities on this aspect.

•    Expressing concern that gTLD expansion may “create a multitude of
monopolies rather than increasing competition”, as well as over “the
apparent desire to alter existing policy that requires a structural
separation between registrars and registries”, with doubts expressed
that the latter issue has been inadequately studied.

•    Seeking reassurance that corporate size and financial criteria will not be the sole basis for application evaluation.

•    Suggesting the need for still more studies to “assess the
impact of a radically changed new gTLD regime” on end users, including
greater confusion and exacerbated harms — while aiming this broadside
at the entire premise of the program: “The GAC wishes to emphasize the
point that such fact finding studies as these should have been
conducted prior to the decision to introduce new gTLDs.”

•    Questioning whether ICANN’s management of new gTLDs will
negatively impact essential functions such as contract compliance
enforcement.

•    Suggesting a “more category-based approach to the introduction
of new gTLDs” to strengthen cultural diversity and encourage local
content and free expression – and that “the structure of the gTLD
application fee regime should reflect these different categories and
the limited financial resources available to applicants for some of
them”. This raises for the first time the prospect that wealthier gTLD
applicants will be asked to subsidize the applications of those with
lesser resources — in fact, near its conclusion the letter
specifically states the GAC’s belief that “experience gained in the
first round would inform decisions on fee levels, and the scope for
discounts and subsidies in subsequent application rounds” and its
encouragement of a “more tiered pricing system”.

•    Opining that “there is a need for more work to be done regarding the costs and the ability to object.”  

Overall the letter requests four new studies plus additional
interviews, surveys, and other data gathering; promises further future
input on two issues; and clearly conveys the view that the case for
accepting unlimited applications for new gTLDs has yet to be made.

It remains to be seen how ICANN will react to this missive. It can
hardly be nonresponsive, especially if it is announced later this month
that the special U.S. relationship with ICANN will persist at least a
while longer. Such continuation will likely elicit strong criticism
from the international political community, and in that context ICANN
may well feel more obliged to demonstrate its sensitivity to the GAC’s
concerns.

In a form e-mail sent last week to those who had filed comments on the
new gTLD program, new ICANN CEO President & CEO Rod Beckstrom
stated:

…the New gTLD Program is a significant undertaking and we are
progressing step by step to ensure that…all potential issues are
understood and resolved before launching what will surely be a
substantial shift in the domain name system…the New gTLD Program will
be launched in a manner that enhances competition and choice for
Internet users, broadens regional participation through the
introduction of IDNs and community based TLDs, and protects the rights
and interests of all.

The GAC letter makes clear the extent of the challenge in meeting those commitments.

Complying with all the GAC’s requests for additional studies and data
gathering could clash with achieving ICANN’s stated goal of opening of
the new gTLD application window in the first quarter of 2010. Scaling
back on the number of applications to be accepted in that round might
temper GAC concerns, but would likely elicit howls of protest from
other quarters.

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