Policy Development Draft - New gTLDs

GNSO Initial Report Introduction of New Generic Top-Level Domains

28 July 2006

Table of Contents

Executive Summary

Term of Reference 1: Recommendations

Term of Reference 2: Recommendations

Term of Reference 3: Recommendations

Term of Reference 4: Recommendations

Next steps

Bibliography

Executive Summary

1. This document is the final draft of the Initial Report of the GNSO's Policy Development Process on the introduction of new top level domains (new TLDs). The Report sets out the key findings that have emerged from a multi-phase policy development process. The key elements of that process have been formal Constituency Statements submitted by each of the GNSO's constituencies, a Call for Expert Papers and a Public Comment Period. In addition, the GNSO Council's new top-level domains Committee (new TLDs Committee) has conducted three separate face-to-face consultations (in Washington DC, Wellington and Brussels) to discuss each Term of Reference. These meetings have been open to observers. In addressing the Terms of Reference, very close attention has been paid to understanding ICANN's Bylaws, Mission and Core Values. The GNSO Council met with the Governmental Advisory Committee (GAC) at ICANN's June 2006 Marrakech meeting to share with the GAC progress made so far and to hear about the development of a set of GAC principles on the introduction of new top level domains.

2. The following sections set out each Term of Reference, the findings that have emerged and, at the end of each section, offer some recommendations for the next steps which could take place. A full list of Constituency Statements, copies of the responses to Calls for Expert Papers and the Public Comment archives can be found in the GNSO's section of the ICANN website at http://gnso.icann.org/issues/new-gtlds.

3. There are two other GNSO policy development processes that have a direct bearing on the work here: the PDP Feb 06 on Policies for Contractual Conditions for Existing TLDs¹ and the work which has been undertaken on internationalized domain names (IDNs)². The final IDN Issues Report was released on 13 July 2006 and can be found at http://gnso.icann.org/mailing-lists/archives/council/msg02677.html. The results of this PDP (since it is in a more advanced stage) will inform the two additional work streams and will need to be taken into account when making final recommendations about the two other PDPs. Some early finding that there are some key principles which are important including consistency of treatment, equitable treatment of registry operators. The PDP Feb 06 will inform and will be co-coordinated with the two additional work streams before the Dec 05 work final report. We do not expect delays.

4. Any policy development process calls for implementation planning to be established to ensure that appropriate resources are made available. Early work is underway by ICANN staff to facilitate a timely implementation of the policy outcomes.

5. The GNSO's Committee on new TLDs met to discuss this Report on Thursday 15 June 2006 to prepare a version of the Report for discussion at the June 2006 ICANN meeting in Marrakech. This document reflects discussions at the Marrakech meeting and will be used to facilitate discussion with the full range of ICANN Supporting Organisations, the Governmental Advisory Committee and the broader community.

6. A formal Public Comment Period will commence in late July 2006. The ICANN Advisory Committees and Supporting Organisations will be invited to respond to the Initial Report. A further face-to-face meeting is scheduled for late August 2006 in Amsterdam for the GNSO Committee to consider responses to the public comment period and inputs from other ICANN stakeholders in addition to any further GNSO constituency views.

7. It is planned that the Final Report will be completed during October 2006, prior to ICANN's December 2006 meeting in Sao Paolo, Brazil. It is expected that the Final Report will contain guidance on a reference Request for Proposal for new top level domain applications and a base contract to which applicants can refer prior to completing the application process.

Term of Reference 1: Recommendations

Term of Reference 1. Should new generic top level domain names be introduced?

Term of Reference 2: Recommendations

Term of Reference 2. Selection Criteria for New Top Level Domains

a) Taking into account the existing selection criteria from previous top level domain application processes and relevant criteria in registry services re-allocations, develop modified or new criteria which specifically address ICANN's goals of expanding the use and usability of the Internet. In particular, examine ways in which the allocation of new top level domains can meet demands for broader use of the Internet in developing countries.

b) Examine whether preferential selection criteria (e.g. sponsored) could be developed which would encourage new and innovative ways of addressing the needs of Internet users.

c) Examine whether additional criteria need to be developed which address ICANN's goals of ensuring the security and stability of the Internet.

1. This Term of Reference was the subject of detailed discussion during two day face-to-face meetings on 24 & 25 February 2006 in Washington DC and on 25 & 26 March 2006 in Wellington, New Zealand, as part of ICANN's regular round of meetings. There was consensus around both the principles for developing selection criteria that map directly to ICANN's Bylaws, Mission and Core Values and the impact of providing appropriate policy guidance to the Board about criteria that could be used in further rounds of new top-level domain applications⁷.

2. The Call for Information listed questions regarding four specific areas including:

• whether the minimum technical criteria for registry operations should be set according to the current registry requirements of, for example, .NET registry;

• whether the minimum technical criteria should make some reference to the proposed size of a new registry;

• whether a separate registry operators' accreditation scheme be established and, if so, what should that scheme look like; and

• whether other business operations criteria continue to be included in a registry operator's application to ensure that any registry operator is adequately funded and professionally managed.

3. At the Washington DC meeting, responses to the selection criteria questions were mapped closely to a review of ICANN's Mission and Core Values. The selection criteria used in the 2000 and 2004 rounds for new top level domains were used as reference points⁹. Constituency representatives were asked to clarify the positions taken in the Constituency Statements but no attempt was made to reach consensus positions prior to the Wellington meeting.

4. The main area of agreement was that selection criteria should reflect ICANN's limited technical mission. It was clear that any selection criteria should be objective and that any selection process would be published prior to an application round beginning. Some Constituency representatives said that provision of a sound operational plan which demonstrated an ability to comply with ICANN policy (where appropriate) and meet minimum technical standards was important. "Objectivity" was a consistent thread throughout the discussions and it was thought that following this principle would encourage participation in any new selection round. This would also enable competitive provision of registry services where an open market environment was most beneficial to end-users.

5. The continuing stability and security of the Internet was another recurring theme which included the treatment of internationalized domain names where compliance with ICANN's evolving IDN guidelines was seen as important. The final IDN Issues Report has identified a series of questions about technical compliance which are important and are related to the work here¹⁰. It was clear that compliance with best practice technical standards was necessary within any registry.

6. Discussion of stability issues also showed that the ongoing use of ICANN accredited registrars as sole retailers of gTLD domains was desirable. Registrar compliance with contractual provisions that promote interoperability contributes to DNS stability.

7. The Wellington meeting provided further opportunities to refine the outputs of the Washington meeting. The GNSO Committee Chairman released a copy of the presentations made at the Wellington meeting and these are summarized below¹¹.

8. The Committee members then developed more detailed positions at the Wellington meetings. After a further day of discussion it was clear that there was strong support for continuing to apply robust technical criteria through any application round. In addition, if applicants wished to offer internationalized domain names at the second level, then compliance with ICANN's IDN guidelines was required. There was strong support for supplying a list of Requests for Comment (RFCs) and other technical standards relevant to registry operators. These views are reflected in the IDN Issues Report found at http://gnso.icann.org/issues/idn-tlds/issues-report-17jul06.htm

9. There was strong support for the levying of an application fee to participate in any new TLD round. In addition, there was discussion on the 15 June 2006 Committee conference call about whether differentiated application fee structures would serve a useful purpose in encouraging more applications for new top level domains. This last idea must be balanced with the presumption that the application process would remain cost neutral to ICANN.

10. There was also strong support for applicants being required to demonstrate financial viability and a robust operational plan. These criteria fit into a basket of requirements around the application process itself including the production of an application time line, compliance with probity requirements, a pre-published base contract¹² and a pre-published set of objective and measurable criteria against which applications would be evaluated. There is not yet a consensus position which balances the desire for robust business plans versus allowing ideas to be tried (and perhaps fail) in an open market. ICANN's role in ensuring the ongoing operation of registry services providers requires further discussion particularly with respect to managing any negative impact on end user registrants. Data escrow arrangements and other technical approaches to the transfer of registrant data are only part of the equation and more discussion about the nexus between selection criteria, allocation methods and ongoing registry services operation needs to be facilitated.

11. There was strong support for applicants being able to demonstrate that their application aimed at a clearly differentiated domain name space and that the purpose of the new TLD was clearly understood. Further discussion is needed on the definition of clearly differentiated domain name space and whether this means the continued distinction between open, sponsored, chartered and any other kinds of registry. This discussion should balance the goal of enhancing competition with the reality that limiting innovation also limited competition between registry services offerings

12. Committee members supported maintaining the use of ICANN accredited registrars to register domain names. They also supported the ongoing compliance with ICANN consensus policies (more discussion of this element is found in section on contractual conditions).

13. There was also strong support for ensuring compliance with, in the case of sponsored TLDs, the charter of the TLD and for addressing domain name registration violations. No agreement was reached about whether the current model of sponsored/unsponsored; restricted/unrestricted; chartered/unchartered would continue.

14. There was discussion of other selection criteria which did not get the full support of the group.

15. Recommendations on Term of Reference 2: The criteria with strong support can be divided into several areas.
    
    
    
    Firstly, "process" criteria which would guide the establishment and conduct of any application round. These criteria include a mandatory application fee; application round probity rules and clear timelines for application completion.
    
    
    
    Secondly, a "technical" criterion which includes compliance with a minimum set of technical criteria which would include a base set of IETF RFCs, and other technical standards. If IDNs are offered, applicants must comply with relevant IETF standards and ICANN IDN guidelines. Further discussion is necessary about the consistent treatment of any new TLD application whether the applicant proposes an ASCII based string or one that uses any other script.
    
    
    
    Applicants must comply with ICANN consensus policies.
    
    
    
    Applicants must offer a clearly differentiated domain name space with respect to defining the purpose of the application. The effect of requiring differentiation on IDN top-level domains has not been fully discussed and further input is required.
    
    
    
    Applicants must have mechanisms in place to ensure compliance with the purpose of a chartered or sponsored TLD, and to address domain name registrations violations.
    
    
    
    Finally, criteria which must be met by applicants to show that that they have the financial and operational resources to execute their plans but the degree to which ICANN plays a role in ensuring a business model that will "guarantee" ongoing operations is not settled.
    
    
    
    The GNSO is interested in input on the pros and cons of sponsorship criteria which more closely match the intent of the 2004 gTLD round and which had support from several, but not a majority of, constituencies. The sponsorship criteria may include "applicants for a new gTLD must represent a well defined community and registrants are limited to members of that community"; "a new gTLD applicant must establish a charter that addresses a defined purpose with eligibility criteria, and registrants must meet the eligibility criteria"; "accurate verification of registrant eligibility"; and, "applicants must explain how the new TLD maximized benefits for the global Internet community".

Term of Reference 3: Recommendations

Term of Reference 3. Allocation Methods for New Top Level Domains

a) Using the experience gained in previous rounds, develop allocation methods for selecting new top-level domain names.

b) Examine the full range of allocation methods including auctions, ballots, first-come first-served and comparative evaluation to determine the methods of allocation that best enhance user choice while not compromising predictability and stability.

c) Examine how allocation methods could be used to achieve ICANN's goals of fostering competition in domain name registration services and encouraging a diverse range of registry services providers.

1. This Term of Reference was the subject of detailed discussion at the Wellington, New Zealand meetings. It was clear that allocation methods are an integral part of developing "process" criteria as applicants should know what kind of allocation method will be used prior to submitting an application for a new TLD. It was also clear that selection criteria form a large part of any allocation method. Clearly defined selection criteria provide a "natural selection" method for applicants and specific, extra allocation methods would only be required where there was a contest over the same application, for example, if there were two applications for .abc, or if consideration of applications had to be prioritized.

2. The record of the full discussion about allocation methods can be found in the reference below¹³. In summary, it was clear that the criteria for choosing an allocation method should be timely, objective, predictable and facilitates the ongoing introduction on new TLDs. It was clear in the GNSO Committee's discussion that there is a preference for a first come first served system which seems to be the most efficient way to process new applications. This approach assumes that applicants comply with an application process which has been clearly defined and that there is not a serious backlog of applications which need to be processed. A FCFS system assumes a continual round of assessment and implementation. This means that there is a minimal amount of subjective analysis of applications which requires detailed "intervention".

3. Alternatively, it has been suggested that a "batch processing" system would be useful, as long as the duration of the process allowed enough time for sound applications to be prepared and that the length of the batch process did not excessively delay the evaluation and launch of new top level domains. It may be that a two-step approach is required and that a transition from a batch processing system to an ongoing FCFS process is necessary if new TLD applications were to be accepted on a continuous basis. Further understanding is required about the different impacts that FCFS and batch processing may have on any application round and the implementation of new top-level domains.

4. It was also clear through the GNSO Committee's consultations that only where duplicate or confusingly similar strings appeared, should special allocation methods be used and that these methods should be defined well in advance. Further discussion is required about what key stakeholders perceive as ICANN's role in determining the success, or otherwise, of registry services beyond a robust application and evaluation system.

5. The GNSO Committee applied the same methodology that had been used for the previous two terms of reference for determining where consensus had emerged for policies on allocation methods. There was strong support for the first come, first served process with some support for either an auction¹⁴ or lottery to deal with competing applications that had already met the other baseline criteria of technical competence and the provision of sufficient evidence of operational and financial capacity.

6. There was strong support for ensuring that ICANN provided sufficient resources to support any application round, particularly where a large number of applications were received.

7. It was evident to some Committee members that comparative evaluations were still a necessary part of any new TLD application process particularly where there were limited resources to deal with any application round and where applicants had proposed similar strings with similar purposes for similar communities of interest.

8. Some participants in the GNSO Committee considered the creation of categories of gTLDs (for example, commercial, non-commercial, unsponsored, sponsored, open and unrestricted, restricted and chartered) and then select the appropriate selection criteria and allocation method for each category, should there be a competition for the same TLD. Further work is required to ensure a full understanding of the definition of any proposed category for new TLDs or if the differentiation of TLD should be abolished and the selection of the appropriate selection criteria and allocation method.

9. Recommendation on Term of Reference 3: There was strong support for a first-come, first-served approved to processing applications. Where there was contention for either the same string or limited staff resources to process applications, there were two main alternatives proposed which each had roughly equal support. These were:
   
   - Objective (auction or lottery)
   
   - Subjective (comparative evaluations of the applications to identify the best applications)

10. The GNSO is seeking broader community input on the two main approaches, and whether the approach chosen should be based on some categorization of gTLDs.

Term of Reference 4: Recommendations

Term of Reference 4. Policy to Guide Contractual Conditions for New Top Level Domains

a) Using the experience of previous rounds of top level domain name application processes and the recent amendments to registry services agreements, develop policies to guide the contractual criteria which are publicly available prior to any application rounds.

b) Determine what policies are necessary to provide security and stability of registry services.

c) Determine appropriate policies to guide a contractual compliance programme for registry services.

1. This Term of Reference was the subject of detailed discussion during a three day face-to-face meeting between 11 & 13 May 2006 in Brussels¹⁵. The first day of the meetings was a tutorial day conducted by ICANN's Deputy General Counsel designed to enable participants — both Committee members and observers -- to gain an understanding of the content of and reasoning behind ICANN's existing registry agreements. The subsequent two days followed the same format as the Washington DC and Wellington meetings with constituency representatives explaining their positions as they related to ICANN's Mission and Core Values.

2. The discussion about this Term of Reference is closely related to another policy development process on policies for contractual conditions for existing registries. The Preliminary Taskforce Report has been produced and the work of the Taskforce will proceed in parallel with the work found here¹⁶. The issues to be addressed in that Taskforce are being addressed in this PDP and there is a very close connection between the two work streams. In addition, the IDN Issues Report refers to policies for contractual conditions for IDN related services¹⁷.

3. The GNSO Committee has referred to other expert analysis in the area of selection criteria, allocation methods and contractual conditions to ensure this process meets adjacent industry standards. It is worthwhile to quote, for example, some of the work done on behalf of the World Bank on mobile license renewals¹⁸ that has many parallels to this work. For example¹⁹, the World Bank Report recognizes that a "major challenge facing regulators in developed and developing countries alike is the need to strike the right balance between ensuring certainty for market players and preserving flexibility of the regulatory process to accommodate the rapidly changing market, technological and policy conditions".

4. It is clear that "promoting regulatory certainty and predictability through a fair, transparent and participatory renewal process" is critical. These conditions echo the priorities of the GNSO Committee. The World Bank Report refers in detail to public consultation procedures and systems for establishing and renewing "license" rights. It also spells out clear conditions under which any "application round" could be established and the way in which any process would be run. Those suggestions are consonant with what is proposed here.

5. A set of policies for contractual conditions got strong support from GNSO Committee members. Top line principles, articulated in particular by the Registries' Constituency, were that policies to guide contractual criteria should not compromise private sector participation and that the application process (and resulting contractual conditions) should encourage long term investment with optimal opportunities for innovation and competition.

6. The Committee supported the need for a gTLD registry to comply with new or changed ICANN consensus policies to one or more of the following areas during the term of the agreement with ICANN:

1. 1. Issues for which uniform or coordinated resolution is reasonably necessary to facilitate interoperability, security and/or stability of the Internet

   2. Functional and performance specifications for the provision of registry services (as defined below)

   3. Security and stability of the registry database for the TLD

   4. Registry policies reasonably necessary to implement consensus policies relating to registry operations or registrars

   5. Resolution of disputes regarding the registration of domain names (as opposed to the use of domain names)

2. It is clear that the predictability of a pre-published "base" or "framework" contract is important to GNSO Committee members. Those contracts need to be consistent in their treatment of different types of registry businesses and several Committee members indicated that the current .jobs agreement provides a good starting point. Several Committee representatives stressed the need for fair treatment amongst registries with equal obligations imposed on operators (for example, with respect to technical standards and business viability). It was also clear that a "registry compliance program" with graded measures for enforcement would be useful.

3. It is also clear that a public comment process on contractual negotiations is desirable but it is recognized that there are limits to which commercial in confidence information should be made available.

4. The tutorial session and subsequent discussions identified some key areas that could benefit from further investigation. Comments along this line related particularly to the establishment of ICANN fees; the fees charged for a registry within any new agreement and the way in which fees are used by ICANN. The Committee supported ICANN providing a consistent approach with respect to registry fees, taking into account differences in regional, economic and business models. The GNSO Committee suggested that ICANN was not necessarily the appropriate organization to impose price controls on the fees charged to registrars within contracts.

5. In summary, there should be a frame agreement to provide some level of consistency with the ability for staff to have delegated authority to approve final contracts. The term of the agreements should be of commercially reasonable length (perhaps ten years but reviewed on a case by case basis).

6. There should be renewal expectancy. Operators could expect renewal of their agreements provided that they had not been in material breach of the contract or repeatedly failed to perform to the standard required in the contract. There should be mechanisms to terminate the contract if the operator has been found in repeated breach of the contract.

7. Any material alterations to the frame agreement should be subject to a public comment period before approval by the ICANN Board. Any new framework contract would take into account ICANN consensus policies current at the time. Any deviation from consensus policies should be explicitly stated and justified in the agreement.

8. Where a registry provides second-level internationalized domain names, the contract should require the registry operator to adhere to IDN standards and ICANN's IDN Guidelines²⁰.

9. The contracts should strike a balance between ensuring certainty for market participants and preserving flexibility for registries to accommodate a rapidly changing market.

10. With respect to the use of personal data, the Committee supported limited use (only for the purpose for which it was collected) of any personal data and supported requiring the gTLD registry to define the extent to which personal data would be made available to third parties. With respect to other forms of registry data, further information would be required before the Committee could reach any recommendations.

11. Recommendations on Term of Reference 4: Further work needs to be done on the establishment of a suitable compliance regime that would operate in tandem with the base registry agreements.
    
    
    
    

Next steps

1. This Initial Report is the result of comprehensive consultation and discussion in wide range of settings and has included a very diverse group of stakeholders such as the GAC and other ICANN Supporting Organisations.

2. This document will now be subject to a formal Public Comment Period after which the ICANN Staff Manager will prepare the Final Report, (PDP Step 9.c) and the GNSO Council will deliberate on the Final Report (PDP Step 10), and the Staff Manager will prepare the Board Report (PDP Step 11) so as to allow sufficient time for the Board to take action not later than January 2007.

3. This approach is consistent with the ICANN Board resolution passed at the Marrakech meeting (found at http://www.icann.org/minutes/resolutions-30june06.htm).

Bibliography

Guermazi, Boutheina and Isabel Neto, Mobile License Renewal: What are the issues? What is at stake?, available here.

Matsui, Masayuki, Comparing Domain Name Administration in OECD Countries, available at http://www.oecd.org/dataoecd/46/38/2505946.pdf

Paltridge, Sam and Masayuki Matsui, Generic Top Level Domain Names: Market Development and Allocation Issues, available at

http://www.oecd.org/dataoecd/56/34/32996948.pdf

Perset, Karin and Dimitri Ypsilanti, The Secondary Market for Domain Names, available at http://www.oecd.org/dataoecd/14/45/36471569.pdf

1 The Preliminary Taskforce Report can be found at http://forum.icann.org/lists/pdp-pcceg-feb06/msg00085.html. The Internationalised Domain Names Issues Report can be found at http://gnso.icann.org/issues/idn-tlds/issues-report-28may06.htm

2 The Internationalised Domain Names Preliminary Issues Report can be found at http://gnso.icann.org/issues/idn-tlds/issues-report-28may06.htm

3 See Board resolution at http://www.icann.org/minutes/resolutions-31mar06.html.

4 See the full text of notes at http://forum.icann.org/lists/gtld-council/msg00030.html.

5 See the full notes at http://forum.icann.org/lists/gtld-council/msg00028.html.

6 See Bruce Tonkin's 26 February 2006 [gtld-council] Discussion on whether to continue with the introduction of new gTLDs.

7 See Bruce Tonkin's 27 February 2006 email (04:00h) which provides a summary of comments made by Washington meeting attendees (http://forum.icann.org/lists/gtld-council/msg00030.html)

8 Found at http://gnso.icann.org/issues/new-gtlds/tech-criteria-15mar06.htm

9 See Bruce Tonkin's 26 February 2006 summary of lessons learnt at [gtldcouncil] Output of brainstorming session on lessons learnt from the previous introduction of new gTLDs since 1999.

10 See, for example, pp 6-7 which sets out a series of policy questions which being addressed in the context of the introduction of IDN.IDN top level domains.

11 See Bruce Tonkin's 28 March 2006 email to the Council list http://gnso.icann.org/mailing-lists/archives/council/msg02274.html

12 All of ICANN's registry contracts can be found at http://www.icann.org/registries/listing.htm which includes a listing of all the current registry operators.

13 See Bruce Tonkin's 27 March 2006 http://forum.icann.org/lists/gtld-council/msg00059.html.

14 Doubt was expressed by numerous Constituency Representatives about the fairness of either auctions or lotteries. On the one hand, it was thought that auctions would favour those with the most financial resource. On the other, lotteries would leave important decisions about registry operations to chance.

15 See Bruce Tonkin's 18 May 2006 email note which sets out the results of the meeting. http://forum.icann.org/lists/gtld-council/msg00131.html

16 The Taskforce Report can be found at http://forum.icann.org/lists/pdp-pcceg-feb06/msg00085.html.

17 Note, in particular, IDN Issues Report, page 8 which asks whether additional contractual conditions ought to apply to IDN.IDN top level domain registries.

18 The full report can be found here.

19 The World Bank is used here as an example only. Regulatory agencies such as Singapore's Infocomm Development Agency (http://www.ida.gov.sg), the Australian Competition and Consumer Commission (http://www.accc.com.au), and the UK's Office of Communications (http://www.ofcom.co.uk/) all suggest similar standards in various documents relating to licensing terms and conditions and the nexus between those standards and sound competition policy. The European Commission provides useful materials that can also guide this work (http://ec.europa.eu/comm/competition/general_info/m_en.html)

20 The most recent version of the Guidelines can be found at http://www.icann.org/topics/idn/implementation-guidelines.htm.

Author: ICANN — Liz Williams

GNSO PDP-Dec05

Introduction of new TLDs — Initial Report