Re: part 3: historical timeline of ICANN's economic research commitment to launching new gTLDs

[k claffy <kc@xxxxxxxxx>]

On Sat, Jan 15, 2011 at 09:16:46AM -0800, k claffy wrote:
  

An attempt to briefly summarize some of the historical timeline of 
ICANN's activities to meet its commitment to resolve open questions 
regarding economic impacts of expanding the generic TLD space [5].
(I left out the flip-flop on vertical integration of registar/
registry industries, which has its own specious trajectory covered 
in other public comments and meriting further explanation from ICANN.)

1. 18 October 2006, "Adopted Resolutions from ICANN Board Meeting" [12]:

        Resolved..the President is directed to commission an independent
        study by a reputable economic consulting firm or
        organization to deliver findings on economic questions
        relating to the domain registration market, such as:

        whether the domain registration market is one
        market or whether each TLD functions as a separate market, 

        whether registrations in different TLDs are substitutable, 

        what are the effects on consumer and pricing behavior of 
        the switching costs involved in moving from one TLD to another, 

        what is the effect of the market structure and pricing on 
        new TLD entrants, and

        whether there are other markets with similar issues, and if so
        how are these issues addressed and by who?

2. December 2008: the U.S. DOC sends a letter, on behalf of
the USG [13], reminding ICANN that they should not move forward
with new gTLDs until they resolve open research issues, including
completion of the economic/market study and cost-benefit
analysis.  Most comments, and especially most firms representing
customers of the domain name industry, are opposed to adding
new gTLDs, which basic economic reasoning suggests will weaken
security, stability, integrity of the DNS.

3. March 2009: ICANN releases two studies by Dennis Carlton,
an economist at the University of Chicago that asserted, without
much basis in fact, that the introduction of gTLDs would be
good for consumer welfare [1, 2].

4. April 2009: The public comment for these two studies includes
a great public thrashing of them for being inexcusably poorly
reasoned , self-contradictory, naive, and not based on any
empirical facts.  Conspicuously, there is never any ICANN-provided
summary of the public comments for this document, the only
documents published that month (or in recent months) lacking
such summaries.  Instead the place where the public comment
summary should be [6] points back to Carlton's report itself.

5. June 2009: ICANN commissions Carlton to write two new papers [4] 
responding to the public criticisms. Carlton delivered two
papers that were disturbingly similar to the earlier ones, and
these new papers were similarly criticized. Public and private
sectors around the world are still virtually unanimously opposed
to new gTLDs.  Supporters are mainly those few who plan to
monetize new TLDs, and/or do not reveal their affiliation.
Again unlike all other reports [7] released that month, ICANN
does not provide summaries of the public comments for these
reports either, or indeed, any indication that they have read
any of the comments on any of the economic reports thus far.

6. In September 2009: leaders from the U.S. Congressional House
Committee on the Judiciary send a letter to ICANN expressing
concerns that new TLDs will likely result in serious negative
consequences for U.S. businesses and consumers [14] and again
ask whether ICANN plans to carry out a credible economic study
on the launch of new gTLDs.

7. Between October 2009 and March 2010: ICANN considers and
dismisses the idea of gathering some measurements (survey)
data to inform community understanding of potential economic
impact. At the March 2010 meeting the ICANN board votes against
gathering any data despite much public support for doing so,
because data gathering would constitute "adding another step,
another process, another set of community discussions and
debate to the process."

8. July 2010: ICANN hires two "new" economists to write a report
entitled, "An economic framework for the analysis of the
expansion of generic top-level domain names", including: (1)
a survey of published studies and resources that describe the
potential impacts of new gTLD introduction: (2) examination
of theoretical arguments about benefits and costs of increased
gTLDs; (3) suggestions of new empirical studies that could
help assess costs and benefits. Like the previous Carlton
report, the authors still evaluate concerns raised by others
by dismissing them without further study. One reason for the
similarity between the two reports is the overlap in authorship
-- despite the loud complaints in the public comment forum
that the previous report was not sufficiently objective, ICANN
commissions a second report ultimately co-authored by the same
company (Compass Lexecon) [3] as the first report, a fact
hidden by ICANN's emphasis on only the Stanford and Berkeley
co-authors in the report's description on the ICANN web site.
The report is widely criticzed, and again, of the 19 reports
that month [8], it is the only one without a public comment.

9. 2 December 2010: DOC/NTIA issues another letter again
scolding ICANN not to proceed with program until outstanding
issues such as economic studies have been resolved [11].
[Between February and December 2010 I ask ICANN privately
several times to please shed some transparency on this issue,
and receive no response until late December, where I'm told
that the public comments will be addressed in the follow-up
version of the latest economic framework report.  They are not.]

10. 3 December 2010: Within 24 hours of the DOC letter, and
hours before the ICANN meeting in Cartagena begins, ICANN
releases the promised update to the economic study [9].  This
77-page report makes a pretty strong case that there has been
no demonstrated significant consumer or social benefit from
gTLD expansion in the past, followed by the vague conclusion 
that ICANN should move forward anyway. There is no coverage of
the concerns in the previous public comment periods, except
for additional depth in the case studies which suggest the
opposite of the report's conclusion.  [I ask ICANN again on
14 December 2010 where the analysis of public comment was, and
never received a response. The concerns are again glossed over
at the Cartagena meeting, even in sessions devoted entirely
to outstanding gTLD issues [10]. ]

As with many other areas of Internet science and technology
policy, no one denies that (or why) we have an epistemology
problem regarding the emerging discipline of domain name
economics.  But if ICANN is going to conspicuously ignore
overwhelming concerns from every other industy except those
that are perceived by many as having captured ICANN years ago,
then it's time for a hard stop and a hard look at the process.

References

[1] Dennis Carlton. Preliminary Report of Dennis Carlton Regarding Impact of New
gTLDs on ConsumerWelfare. http://www.icann.org/en/topics/new-gtlds/
prelim-report-consumer-welfare-04mar09-en.pdf.

[2] Dennis Carlton. Report of Dennis Carlton Regarding ICANN's Proposed 
Mechanism for Introducting New gTLDs. 
http://www.icann.org/en/topics/new-gtlds/carlton-re-proposed-mechanism-05jun09-en.pdf.

[3] George Kirikos. Criticisms of Compass Lexecon. 
http://forum.icann.org/lists/economic-framework/msg00002.html.

[4] ICANN. ICANN Email Archives: competition-pricing-prelim. 
http://forum.icann. org/lists/competition-pricing-prelim/.

[5] ICANN. ICANN New gTLD Program Information Center. 
http://www.icann.org/en/topics/new-gtlds/related-en.htm.

[6] ICANN. ICANN Public Comment April 2009. 
http://www.icann.org/en/public-comment/public-comment-200904.html#compri.

[7] ICANN. ICANN Public Comment July 2009. 
http://www.icann.org/en/public-comment/public-comment-200907.html.

[8] ICANN. ICANN Public Comment July 2010. 
http://www.icann.org/en/public-comment/public-comment-201007.html.

[9] ICANN. New gTLD Economic Study Phase II Report is Released. 
http://www.icann.org/en/announcements/announcement-03dec10-en.htm.

[10] ICANN. New gTLD Program Status. http://cartagena39.icann.org/node/15497.

[11] ICANN. US Government Opposes Launch of New gTLD Program in Cartagena. 
http://blog.icann.org/2010/12/us-government-opposes-launch-of-new-gtld-program-in-cartagena/.

[12] ICANN. ICANN Adopted Resolutions from ICANN Board Meeting, October 2006. 
http://www.icann.org/en/minutes/resolutions-18oct06.htm.  

[13] NTIA. Correspondence to Peter Dengate-Thrush, ICANN Chairman of the Board 
of Directors from Meredith A. Baker, Acting Assistant Secretary for 
Communication and Information, NTIA. 
http://www.icann.org/correspondence/baker-to-dengate-thrush-18dec08-en.pdf.

[14] US Congress. Correspondence to Rod Beckstrom, ICANN President and CEO
from Congressman Lamar Smith and Howard Coble. http://www.icann.org/
correspondence/smith-coble-to-beckstrom-15sep09-en.pdf.