This Position Paper documents the strong demand for new gTLDs. ICANN should declare in advance its intention to add 500 new gTLDs over the next three years. Additions should take place in a gradual but progressive manner and should be halted only if proven threats to stability develop. After the three-year period there should be no fixed limit on the number of new TLDs or registries. Artificial limits on the name space should not be used as a form of intellectual property protection, especially once a UDRP has been adopted. The content of the top-level name space should be driven by applications submitted by prospective registries. End users and suppliers, interacting in a marketplace, should determine the market structure of registries, registrars, and the name space. ICANN's role should be strictly limited to the coordination of their activities and to defining the minimal technical and operational criteria needed to maintain the stability of DNS.
Working Group C members
Milton Mueller, Syracuse University School of Information Studies
Rod Dixon, J.D., LLM, Rutgers University-Camden
Timothy Denton, BA, BCL, Telecom and Internet Law and Policy
Mikki Barry, Domain Name Rights Coalition
William Walsh, DSO Net
Christopher Ambler, Image Online Design
Joop Teernstra, IDNO
Anthony M. Rutkowski, NGI Associates
Paul Garrin, CEO, Name.space
Kathryn Vestal, Esq. Billings, MT
Hans Klein, Computer Professionals for Social Responsibility
Don Mitchell, Vienna Virginia
Peter Deutsch, Shophound, Inc.
Richard Sexton, VRx
a) Second-level domain names under the dot com TLD routinely change hands for enormously inflated prices. (See Table) These are not cases of "cybersquatting" but legitimate trades of ordinary, untrademarked words. High prices reflect the artificial scarcity of common names in existing gTLDs, and the premium on .com names in particular.
Domain Name Price
Bingo.com US$ 1.1 million
Wallstreet.com US$ 1.03 million
Rock.com US$ 1.0 million
Eflowers.com US$ 1.0 million
Drugs.com US$ 800,000
University.com US$ 530,000
Computer.com US$ 500,000
Blackjack.com US$ 460,000
BBC.com L 200,000
Business.com US$ 150,000
Internet.com US$ 100,000
Trade.com US$ 40,000
b) There are widespread complaints among users that it is becoming increasingly difficult to find simple domain names in the NSI gTLDs. The basis for these complaints was verified in an April 14, 1999 Wired News survey, which found that of 25,500 standard dictionary words, only 1,760 were free in the .com domain. At the time of that article, only about 7.5 million domain names had been registered. More than 3 million have been registered in the ensuing five months.
c) Currently, the weekly growth rate of domain name registrations is over 270,500. Projecting that growth rate into the future would put the number of domain name registrations at 67 million by 2003. Current gTLDs simply will not be able to contain such growth.
d) The growing demand for domain names cannot be satisfied by ccTLD registries. The problem is not capacity, but consumer choice. Most users prefer gTLDs. 74% of the world's domain names are registered in gTLDs; 61% are in dot com. The gTLD's share of total domain name registrations has remained constant since 1997. This is true despite the fact that the proportion of Internet users outside North America has grown significantly in the same period. Internet users' preference for gTLDs over ccTLDs has remained evident despite the limited choice of gTLD names available now. Expanding the number of gTLDs and making their semantic content relate to different cultures and languages will make this preference even stronger. We believe that TLD policy ought to reflect end user preferences, not top-down, preconceived notions of where users "ought" to register.
e) On the supply side, there are numerous potential suppliers of registry
services willing and able to administer new gTLDs. These include, but are
not limited to, Core, Image Online Design, Name.space, VRx, and MHSC. Thousands
of registrants have paid to reserve domain names under TLDs not carried
in the legacy IANA root. Several ccTLD registries, such as .NU, .CC, and
.TO, have transformed themselves into gTLDs, marketing their names globally
as alternatives to .com, .net and .org. It is obvious that these businesses
perceive a serious demand for gTLD services.
a) ICANN announces its intention to accept applications for 500 new gTLDs over the course of the next three years.
b) The applicants for these new gTLDs would be added at a gradual pace =96 e.g., 10 the first six months, 40 the next six months, 150 the second year and 300 the third year.
c) A defined proportion of the new gTLDs should be reserved for names that reflect distinct cultural/linguistic groups. ICANN's 5 geographic regions could be used as the basis for these reservations.
d) Instead of an open-ended "evaluation" period, we propose that ICANN define clear, objective, quantitative indicators of problems that would justify an interruption or cessation of the process of adding new gTLD registries and names to the root. In other words, new gTLDs should be considered innocent until proven guilty. After the third year there should be no artificial limit on the number of gTLDs.
A proposal similar to this one received the support of about 35% of
the voting working group participants in a straw poll conducted by the
WG-C chairs. Below, we enumerate the reasons for the more open, diverse,
and competitive approach to the new TLD problem.
A pre-announcement of a larger number, on the other hand, makes it clear that the initial winners of new gTLD awards can anticipate plenty of additional competition. Investment and entry decisions of new competitors will be far more rational. Consumption decisions will be based on the need for and value of the domain names themselves, not on attempts to exploit artificial scarcity.
It is legitimate for the trademark and intellectual property interests to advocate case-specific dispute resolution procedures to protect themselves from abusive domain name registrations. It is not legitimate, however, for trademark holders to demand what amounts to a blanket prohibition on entry into a market for a legal service (domain name registration) solely to make their policing and enforcement task cheaper and easier. Such a policy unfairly imposes costs and restrictions on millions of innocent consumers and suppliers. Operating a TLD is not, per se, abusive or infringing; infringing and speculative name registrations constitute a tiny fraction of the total number of registrations in any TLD. Similarly, we know that the existence of VCRs, photocopying machines and similar recording devices will result in copyright violations. No one in this day and age proposes to ban them or severely restrict the number that can be manufactured and sold for that reason. Technology should be allowed to develop, and legal protections should be adjusted, if necessary, to reflect new realities. We should not, therefore, restrict the number of gTLDs based on concerns about their impact on trademark protection.
Even if one does not agree with the reasoning above, the adoption of a UDRP by ICANN completely severs any linkage between the number of gTLDs and concerns about trademark protection. Under the UDRP, contact information will be accessible and accurate, and challenges to registrations will be easy and inexpensive. Cybersquatters have lost every court case in which they have been challenged at any rate, and all objective indications are that the problem is declining. The UDRP should serve as an additional deterrent.
Finally, we would point out that narrow restrictions on the number of
gTLDs actually contribute to many "cybersquatting" problems. Name speculation
is fueled by the premium value attached to domain names in gTLDs. That
premium value is largely a product of artificial scarcity in the TLD space.
Also, if there are only four or five new gTLDs, the most logical course
of action for major trademark holders will simply be to pre-emptively register
names across all gTLDs. That defeats the purpose of adding gTLDs.
a) Should registries be shared, exclusive, or should both be allowed?
b) Should registries be non-profit, for-profit, or should both be allowed?
c) Should ICANN define the names to be added to the root, or should applicants come to ICANN with proposals for names? Should the names available represent a fixed, standardized taxonomy?
All of these questions can be boiled down into one fundamental issue. Does ICANN control the market structure for domain name registrations and then license specific firms to fit into its pre-ordained structure? Or, do end users and suppliers, interacting in a marketplace, determine the market structure of registries, registrars, and names, and ICANN in turn coordinates their activities?
We believe that the latter alternative is the best one and the only policy consistent with ICANN's mandate. ICANN should not impose any specific business model upon registries, nor should it centrally impose any specific pattern of names. It should allow the choices of end users in the marketplace to decide which models and names succeed and which fail.
We believe that discussion of business models has been distorted by the case of Network Solutions and its near-term market dominance. The White Paper sought to remedy NSI's monopoly on gTLDs by requiring sharing in .com, .net, and .org. But the policy approach to NSI's short-term dominance should not dictate how the domain name market works in the long term. Indeed, we believe that ICANN lacks the authority to set itself up as an economic regulator and impose specific business models.
The content of the top-level name space should be driven by applications submitted by prospective registries. Registries should contract with registrars on a free market basis, with no pre-ordained pattern. Competition in the marketplace and user preferences will determine which approaches succeed. Regulatory and legal remedies to consumer protection problems that develop should be left to professional regulators in national governments. ICANN should concentrate exclusively on technical and administrative coordination of registry operators to ensure stability, interoperability, and accountability. It should establish basic qualifications for top-level domain name registries, and these should be confined exclusively to technical stability and financial responsibility.
The following are the reasons for this approach:
6.1 Product differentiation and innovation may require integration of the registrar-registry function. A registry that wants to create a distinct identity and unique features for a TLD may need to control who registers within it. It may also want to control the front-end software interface for registration or other technical and business parameters. For example, a TLD devoted to North American aboriginals, as was proposed to WG-C, may want to ensure that specific tribal names are only assigned to legitimate members of that tribe. Or a privacy-enhanced gTLD, which was also proposed in comments to WG-C, may want to dictate certain technical parameters and protect the integrity of its data. Either requirement might best be implemented by integrating the registry-registrar function. This should be an option available to applicants.
6.2 Imposing uniform models on new entrants will probably make it more difficult for them to compete with NSI. Dot com already has enormous market dominance and a huge economic premium is attached to names in that TLD. Com and the other NSI gTLDs are already shared, and their wholesale price is regulated. If new entrants into the marketplace are forced to adhere to the exact same business model, their ability to generate the profits, mindshare, and investment required to challenge NSI may be hampered.
6.3 Compulsory sharing requires detailed technical and economic regulation. As the US Department of Commerce has learned, imposing "equal access" upon a registry requires: a) fixing the wholesale price; b) ensuring that the same SRS software is used; c) trying to determine the economic costs of the registry; d) regulating the price for transferring names from one registrar to another; and other complex monitoring and regulatory/contractual issues. ICANN lacks the resources and the expertise to engage in such activity on a global basis. Furthermore, ICANN is not the only line of defense against abuse of market power. Antitrust actions, national-jurisdiction price regulation, consumer fraud proceedings, and other remedies are available.
6.4 The benefits of sharing can be realized without making it compulsory. Shared-registry TLDs are an option in the marketplace. The NSI gTLDs are already shared. Several ccTLDs are also operating on that model. If consumers express a clear preference for the price and service delivered by this model, then it will be emulated. If, however, consumers willingly choose services offered by businesses following a different model, why should ICANN interfere?