[ga] ICANN Publishes Comprehensive Evaluation of the Introduction of the .aero, .biz, .coop, .info, .museum, .name and .pro gTLDs

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ICANN Publishes Comprehensive Evaluation of the Introduction of the .aero,
.biz, .coop, .info, .museum, .name and .pro gTLDs
http://www.icann.org/announcements/announcement-31aug04.htm

Prepared for the
Internet Corporation for Assigned Names and Numbers (ICANN)
by
Summit Strategies International

The full report may be viewed at:
http://www.icann.org/tlds/new-gtld-eval-31aug04.pdf

EXECUTIVE SUMMARY
http://www.icann.org/announcements/announcement-31aug04.htm

In November 2000, the Board of Directors of the Internet Corporation for
Assigned Names and Numbers (ICANN) selected seven proposals for new
top-level domains (gTLDs): .aero, .biz, .coop, .info, .museum, .name and
.pro. This was the first effort to expand the domain name system (DNS) since
the 1980s, other than by adding "country code top-level domains" that
correspond to particular countries or territories. Shortly before the first
of the new gTLDs was launched in September 2001, the ICANN Board decided
that it was important to evaluate the "proof-of-concept" under which they
were introduced. The Board established the "New TLD Evaluation Process
Planning Task Force" (Task Force) to determine the scope of the evaluation.
The Task Force decided that seven questions, among others, would take
priority. Those questions, which are the focus of this report, address the
effectiveness of intellectual property protections, compliance with
registration restrictions, competition, the reasonableness of the legal
framework, and regulatory issues.

The new gTLD start-up periods proved generally effective at protecting the
interests of trademark holders, but suffered from other problems. The lack
of any screening or verification in the .info Sunrise period led to serious
abuses, including an unusually high number (43%) of registrations that had
to be cancelled or transferred. The intellectual property claim process that
.biz established operated more smoothly, but was extremely complicated. It
proved fairer than a Sunrise period because parties without registered
trademarks ? including individuals ? could defend registrations by
demonstrating a legitimate interest or right. The .name system of defensive
registrations was complex too, and in an unrestricted TLD would not be
consistent with attracting new users and uses to the DNS. Looking to the
future, these experiences suggest several options: (i) a Sunrise period that
verifies registrations by use of online databases and other means in a
cost-effective manner; (ii) notice to prospective registrants and trademark
holders of their respective claims prior to adjudication, perhaps on the
basis of the familiar UDRP rather than the new "STOP" procedure .biz used;
or (iii) reliance on UDRP alone, as simpler and appropriate given that
trademark registrations may constitute only 2 - 3% of all registrations.

The process .info and .biz used to allocate names ? called a "round
robin" -- was criticized for enabling manipulation of the system. Some
registrars kept their list of desired names short and offered coveted slots
to their best customers. Others used registrars they controlled to do the
same, while they opened their own lists to the general public. (Initial
efforts by .biz to design an alternative distribution system for led a court
to determine it would have constituted an illegal lottery.) The .name
registry sought to eliminate the advantage of submitting shorter lists by
using random batch processing, but that did not prevent registrants from
submitting duplicate requests through multiple registrars. Admittedly, the
dilemma of how best to allocate names does not have an easy solution. Other
options include first-come, first-served; auctions; and reverse Dutch
auctions. The most appropriate method depends to a great extent on which
underlying values should be given priority. It also depends on which entity
should benefit from the monetary rewards that certain names generate. Both
subjects require more discussion within the ICANN community.

Both the .biz and .name gTLDs are subject to restrictions that limit
registrations to commercial purposes and to personal names, respectively.
Random sampling indicated fewer problems than expected in .biz, with 1.8% of
the registrations appearing to fail to satisfy the criteria and another 9.6%
being unclear. In .name, where it was somewhat easier to estimate
noncompliance, 10.6% of registrations raised questions, with another .8%
unclear. While the registries are not obligated to enforce the restrictions
through verification, there are simpler methods, such as random screening,
or heightened scrutiny when a registrant reaches a certain number of
registrations, which could help. Another solution is to recognize the
difficulty of enforcing restrictions on global registries and adopt the
model offered by the .com, .net and .org TLDs, which were once restricted
but are no longer.

The new gTLDs have introduced some competition, but how much is debatable.
Examining market share, extent of actual choice and price elasticity
suggests that impact has been minimal. Other evidence, however, indicates
that TLD expansion has attracted about 20% new registrants and led to new
uses among 40 ? 60% of registrants. The most significant contribution has
been the development of facilities-based competition. As a result, new
providers of registry services have been able to compete effectively with
the incumbent registry, VeriSign, on that basis. Innovation has played a
supporting role, and may become increasingly important as the three largest
registries work to distinguish themselves from one another.

The agreements that underpin the new gTLDs reflect a level of detail that
may not be necessary for future TLDs. While it was understandable for ICANN
to have erred on the side of caution as it undertook initial expansion, the
resulting legal framework is cumbersome. There was relatively strict
insistence that the agreements adhere to key provisions of the original
proposals, although it appears that such rigidity was not always the wisest
course. While the agreements are relatively uniform, there are some cases --
such as the requirement that smaller, sponsored TLDs use only
ICANN-accredited registrars ? where divergence would have made sense. In a
future round, it should be possible to use a streamlined base agreement and
limit appendices to those necessary to ensure critical elements of registry
performance and compliance with ICANN policies. There should also be more
flexibility in the agreements to enable both ICANN and the registries to
address routine issues.

Launching a new gTLD is not for the faint of heart. The experiences of the
six that have done it already, and the wisdom the community as a whole as
gained, should provide valuable assistance to those TLDs that follow.


GNSO Secretariat