Serious failings of both process and design which need to be remedied prior to implementation (II)

[Paul Tattersfield <gpmgroup@xxxxxxxxx>]

We are pretty sure some of the key thinking underpinning the GNSO new
gTLD program is so fundamentally flawed, serious questions need to be
asked as to whether the process as a whole should be allowed to
continue in its current form without substantive revision. It should
be noted we are not against new gTLDs, but there has to be serious
reservations with the framework the GNSO is proposing for the
implementation of new gTLDs.

While the GNSO proposal is premised around two laudable notions

1.) Incumbents shouldn’t be allowed to prevent entry.
2.) ICANN shouldn’t be in the business of picking winners and losers.

Simply combining these notions is very dangerous and will almost
certainly lead to an abjuration of Internet governance in several
critical areas. Whilst clearly benefiting ICANN and some would be
contracted parties we believe the potential resulting externalities
for innocent third parties are unconscionable.

Many of the design failings for the proposed GNSO new gTLD process
have been highlighted in the public comment periods for the 4th over
arching issue - Economic Studies.

These design failings have not had sufficient discussion by the ICANN
community as a direct result of failings in ICANN process. It is
incredible that comment periods on the 4th overarching issue have
never been summarised in over 18 months. And the two earlier public
comments periods have actually been quietly removed from the Public
comments page over a year ago!

The public comment forums removed without summary are
http://forum.icann.org/lists/competition-pricing-prelim/ (Closed April
2009 & not summarised)

http://forum.icann.org/lists/competition-pricing-final/ (Closed July
2009 & not summarised)

with only

http://forum.icann.org/lists/economic-framework/ (Closed July 2010)
actually showing on the “Awaiting Summary/Analysis” section of the
public comment page.
http://www.icann.org/en/public-comment/

By not considering all of the public comments ICANN has spent
$100,000’s on economic reports which look only at a subset of the
economic issues. Further Kurt Pritz at the actual ICANN meeting due to
consider approving the final guide book had the audacity to turn round
and say “they [ICANN] are not qualified to summarize public comment on
the 4th over arching issue of Economic Studies and they plan on
leaving it to the Economists to summarise” AFTER the then proposed
vote for a Final Applicant Guide book on Dec. 10, 2010.



These process failings alone show serious problems with the way ICANN
handles public input and gives the impression at least that the
public’s concerns are simply ignored when they conflict with a
predetermined position. For an organisation which presents itself to
the world as a bottom up consensus driven organisation this has to
raise serious management concerns.

However these process failings do not stand in isolation and have been
compounded by other recent actions which exhibit similar process
failings.

We believe the summary of the whole of the DAG 4 comment periods were
held back so that the staff could update comments after the Trondheim
Board resolutions. This leads to a situation where the comment periods
of the previous iteration are overlapping with the latest iteration of
the draft guidebook. This isn’t helpful given the voluminous nature
and the complexity of interactions between different elements of each
DAG and supporting documents.



For many in the community, and especially for those whose primary job
function is not involved with a company seeking a valuable business
arrangement with ICANN, and who give their time voluntarily, it means
time and study has to be allocated primarily to only the current
documents as a matter of necessity. This removes much needed checks
and balances from the community input and review processes.

The problems are further compounded when unnecessary and arbitrary
time pressures are introduced by short comment periods, especially
ones which overlap with ICANN public meetings. Again resulting in
insufficient time being given to understanding how ICANN is or is not
using earlier comments to formulate the latest iteration.

The Board’s change of position on the Vertical Integration / Vertical
separation 180 degree switch in ICANN’s position with the organization
of the relationship between groups of contracted parties days before a
proposed final document is wholly inappropriate for a process which
involves monumental change to one of the most successful and global
systems in the history of mankind.



This is compounded by the omission of any rationale for this
fundamental change even two months after the decision. Given the
complexity of the issues involved the fact that the decision was not
even unanimous with serious concerns expressed by a board member

http://www.icann.org/en/minutes/minutes-05nov10-en.htm

"I oppose this motion on several grounds. First, the resolution makes
a very significant change in relationships between registrars,
registries, and registry service providers. It will drastically change
both the current dynamics of the domain industry and the way in which
it will evolve. This change will be introduced concurrently with a
major expansion of the gTLD space, and we cannot predict with any
certainty the effects of either change, much less the combination.

"Second, the significant extent of this change makes it irreversible
for all practical purposes. If unintended consequences appear that
make it advisable to re-introduce some separation between parties, it
will be impossible to do so without major disruption of the players in
this industry.

"Third, in spite of the measures to be taken to ensure "good conduct,"
the resolution has the potential to commingle all of the data, public
and private, regarding a registry in one place, providing the
possibility of easy and invisible sharing of data within a merged or
co-owned entity regardless of the scope of any agreement with ICANN.

"Such sharing is likely to be undetectable given the close
affiliations among the entities. Data now forbidden to be shared
between registries and registrars will be shared. Both auditing and
enforcement by ICANN are unlikely to be effective, all the more so as
we move from 20+ to hundreds of new gTLDs.

"Finally, a combined registry-registrar having the possibility of data
sharing will have more market power than otherwise. Assuming that each
gTLD registry must continue to treat all registrars equally, the real
benefits of vertical integration are largely illusory, but those that
can be easily obtained by the officially forbidden sharing of data are
real.

"The removal of restrictions to vertical integration embodied in this
resolution is unnecessary, and goes counter to both the interests of
registrants and the global public interest."



The absence two months later of any rationale raises yet again serious
process concerns for an entity which places so much importance in
being a bottom up community consensus organization.

Finally while messily extending the period for public comments may in
the future give rise to a historical perspective of reasonable
consideration of public interest the actual reality means input on
important issues will simply be lost because many people will not be
prepared to spend their holidays having to try and study, comprehend
and re submit all of the additional changes and implications
introduced by the intervening public meeting and resolutions.

We are not alone in highlighting these process failings. The final
recommendations of the Accountability and transparency review team,
currently open for public comment
http://www.icann.org/en/reviews/affirmation/atrt-final-recommendations-31dec10-en.pdf
proposes a series of mechanisms for the considered and timely review
of public comments to ensure the problems, issues and failings
identified above are removed from the ICANN process to enable it to
meet its obligations under the Affirmation of Commitments AoC.



The whole of GNSO proposal for new gTLD implementation evolves around
trying to develop a single framework for all types of gTLD. Since the
initial DAG, there has been a reluctance to discuss or amend the one
size fits all approach. This is very concerning for a bottom up or
consensus driven organization when it is clear even to the uninformed
observer that each different category will introduce markedly
different externalities and provide markedly different levels of
social benefits.

Further this approach leads to the impression at least that ICANN has
been captured by vested interests and the new gTLD process will
implemented as a one size fits all regardless of community concerns.
The one size fits all approach is convenient as the demand for new
gTLDs is unlikely to be uniform, indeed much of demonstrable need for
new gTLDs could be satisfied by concentrating on specific needs.

The latest economic study –  Economic Considerations in the Expansion
of Generic Top-Level Domain Names Phase II Report recognizes that
different categories of new gTLDs are likely to differ in both their
need and the benefits they are likely to provide.
http://www.icann.org/en/topics/new-gtlds/phase-two-economic-considerations-03dec10-en.pdf

The fact that the board believes it can enforce a vertically
integrated Registry / Registrar code of conduct raises serious
questions as to validity of ICANN’s assertions that it would be unable
to enforce compliance of categories for new gTLDs.

By continuing to adopt a one size fits all approach for all new gTLDs
ICANN is missing a huge opportunity to shape the proposed introduction
of new gTLDs for the public interest. Without categories the new gTLD
framework has to be far more constrained to cover for eventualities
many of which have absolutely no bearing on all but one category and
therefore introduce needless regulation and needless complexity for
other categories.


Each of the likely types of gTLDs bring individual policy concerns
however two of these types have the potential to bring fundamental
economic changes to the Internet and not necessarily in a good way.



Corporate & Brand gTLDs

.com isn’t sold or advertised by VeriSign. It is sold and branded
implicitly by virtually every major corporation using it day in day
out across all their communications. It’s that simple.

The success of the internet is because it delivers efficiency to the
market place. It enables anyone to reach an unfathomable number of
people simply by buying a domain name. Cost - $10 + hosting per year.
Mind blowing!

ICANN’s new gTLDs for corporations and brands changes this by taking
advantage of the efficiencies afforded by the original design of the
Internet over non internet models. And in doing so creates a super
league the cost of entry to which is $185,000 and $25,000 + hosting
per year.

Recent trends in brand evolution have led to many websites both on and
off line using a more and more minimalist form

http://www.brand.com

www.brand.com
brand.com

.brand if allowed may follow

If this happens and is reinforced worldwide in corporate
communications day in day out users will quickly come to recognize
that a brand to the right of the dot is a major player and therefore
by implication a brand to the left of the dot will be perceived as a
lesser brand.

The level playing field of the internet is destroyed and a super league created.



The Creation of a Super league

There has to be serious economic concerns not least because a single
layer model to the right of the dot can never replicate the
complexities of businesses around the world. Whilst initially
appearing to offer more freedom for new domains it actually offers
less freedom.

For example if there is .dell .ibm what about brands like .hp? HP is
seriously disadvantaged simply because its brand is 2 letters and 2
letters are reserved for country codes.

For organizations like Proctor and Gamble the situation is even worse.
Hot only will .pg not be possible, but their branding is not based
around individual products. The costs of new gTLDs at $185,000 and
$25,000 + hosting per year, just doesn’t scale across multiple brands.

Or the fact that it offers a system where there can only be one
organization to the right of the dot - ever! This is a step backwards
from the existing system which by careful management of competing open
generic gTLDs allows multiple totally separate entities to each enjoy
a similar level of branding in the second level to the left of the
dot.

What about organizations whose names conflict with geographic areas?
.amazon? What about organizations or brands that share a name with
places that may in the future have a need for an internet presence?
.moon or .saturn etc. What about companies whose brands are already
taken like .cat?

But most importantly a Super league destroys the ability to compete on
a level playing field. At the moment to launch some software designed
to compete with Microsoft or Sun its $10 + hosting a year then it’s
down to skill and innovation.

A super league changes this and medium sized players will have to
consider whether it worth spending $185,000 + $25,000 per year with
ICANN to enjoy the same level of branding and enter the Super league.
For startups and smaller players cost of admission to this implicit
branding advantage is likely to prove prohibitive.



The Creation of Private Monopolies

If day to day usage and advertising of corporate bands to the right of
the dot means they enjoy competitive advantage then generic names to
the right of the dot will become to enjoy a similar branding
advantage.

Generic names such as .news .shop .store .music .radio and .movie will
become to be perceived as superior. Their simple existence will allow
the creation of a series of individual worldwide monopolies which will
be awarded primarily for the benefit of the most economically
advantaged.

Because of the unique signaling each gTLD brings very few gTLDs will
compete with each other but will rather provide a monopoly advantage
to single entities  (and mixed entities) to compete with businesses
operating from the second level in existing open generic gTLDs like
.com.

What happens if Microsoft applies for .search? If they are granted
rights to .search how is google.search handled? Maybe Microsoft would
be happy to allocate it to Google especially if they can use
shopping.seach, images.search & video.search to point to their own
search engine Bing. This really blurs the DNS framework with the
existing entities providing a recipe for consumer confusion to be
replicated in every vertical.

What happens if Rupert Murdoch purchases a controlling interest in a
company which is awarded .news?

The problems with allocating a root level string are already becoming
clear from existing strings from the 2004 round. .jobs .mobi, .pro
.xxx, and .travel have introduced serious negative costs and impacts
for the domain naming system and its management processes.


As a case study, the award of the .jobs gTLD illustrates the problems
with awarding monopoly positions. .jobs was initially awarded to serve
the jobs industry. The original concept was simple any real world
entity offering verified services in the jobs industry could apply for
their-name.jobs.

The concept was to provide a verified level playing field for the
whole industry. However the people running .jobs have realized that
generic names such as engineering.jobs or atlanta.jobs could generate
additional revenue and recently have applied to ICANN to have their
contract amended to allow the registering of generic names.

Others in the Jobs industry have identified that this application
fundamentally changes the economics of their relationship with .jobs.
Whereas .jobs was setup to be run by an entity providing a service to
the worldwide jobs community, the entity running .jobs sought to
leverage its relationship with ICANN to enable it to compete against
the same community whose support it elicited and required for its
original application.

Several people in the industry have realized the economic implications
this change will make and there are around 300 comments objecting to
the creation of this monopoly position in the recent ICANN comments
period on the request for changes submitted by the .jobs registry.
http://forum.icann.org/lists/jobs-phased-allocation/

It will undoubtedly be argued that the application is creating
“competition” as per the simplistic notion of entry providing
competition in the earlier economic studies from Professor Carlton,
but there has to be serious questions as to the ethics of allowing
ICANN to provide its own contracted parties with advantage in their
competition with all other entities in their industry simply because
of their contractual arrangements with ICANN.

The ICANN board in its latest resolution recognised this conflict of
interest and resolved to have ICANN’s compliance staff carefully
monitor the .jobs registry future actions. This resolution was only
possible because .jobs is a sponsored gTLD. In the GNSO’s proposal for
new gTLDs it will not be possible to correct such inequities as they
will be “designed” into the actual framework.


Not only will ICANN not be able to protect entities which have to
compete from the second level, there is also no mechanism for ICANN
with its current proposal to make sure new gTLDs end up with entities
which will prove good guardians of the namespace. In fact much of the
commercial interest for category defining generic new gTLDs may come
from single entities seeking commercial advantage over their
competitors.

Awarding a generic gTLD in any industry to an applicant based in, or
controlled by someone in the same industry, is game changing compared
with the current system which allows numerous individual entities to
compete equitably in the second level of open gTLDs and ccTLDs.

Trademark Law doesn’t allow this advantage to be conferred nor should ICANN.



In conclusion we believe the GNSO’s process for new gTLDs is so
damaging to the Domain Name Space and the Internet as a whole it
should be sent back to the GNSO for serious revision, rather than
expecting the ICANN board to try and out point the GAC with such a
fundamentally flawed proposition.


Respectfully submitted,


Paul Tattersfield
http://gpmgroup.com