GeoTLDs and Auctions

["Dirk Krischenowski | dotBERLIN" <krischenowski@xxxxxxxxxxxx>]

GeoTLDs and Auctions

I was surprised by ICANNs "Economic Case for Auctions in New gTLDs"  paper
especially with view to the latest presentation on the new gTLD
implementation process in Paris. That Paris presentation highlighted the
protection of community interests such as religious organisations,
geographically based communities or indigenous groups and suggested a
preference of bona fide community-based applicants against pure generic
applications for the same string (reference:
https://par.icann.org/files/paris/gTLDUpdateParis-23jun08.pdf). Contrary to
this the only text passage in the current paper where ICANN considered the
community-based applicants is "a 25% bidding credit could be offered to
community-based bidders whose community is located primarily in
least-developed countries". This reminds me of the discussion on discounts
for HIV medicine for less developed countries a couple of years ago, where
pharmaceutical companies cut a very poor figure.

But anyway, let's see ICANNs paper on new gTLD auctions as an attempt to get
valuable community feedback if auctions are the "one size fits all" way to
allocate a gTLD in the case of contention.

I can only write on behalf of the .berlin (dotBERLIN) application, but my
ideas as to "what would happen in the case of more than one application"
could also apply to other GeoTLDs like .paris, .cym or .africa. 

Let's assume that there is one applicant with the backing of the TLD
community concerned and legally located in the country of that community and
another applicant with no community support and located in another country.
What could happen?

1. A view on ICANNs' Evaluation Process flow chart (reference:
http://www.icann.org/en/topics/gtld-evaluation-process-16jun08.pdf) reveals
that right after posting of the applications the Objection Filing Phase
starts. One of the objection criteria is the Community Objection. This is
the first turning point where the applicant with no community support can be
kicked out of the game if some established institutions for the community
file a well founded objection.
2. The second turning point is the Governmental Advisory Board decision.
Every applicant for a geographical or geopolitical string knows that a
GeoTLD might only be granted if the relevant government agrees with the
application. I could hardly imagine that the German government and the
Berlin authorities would not object to another .berlin applicant from a
country abroad and with no relation to a location with the name Berlin. 

Even if both applicants have passed the objection process and the applicant
with no community support wins an auction there might be pitfalls like
intellectual property rights that can prevent the successful applicant to
open up the target market successfully.

Depending on national and international legislations there might also be
cases where one of the applicants makes itself liable for the costs
associated with an artificial prolonging the application process, for
instance if he acts in bad faith.

The auction model would clearly prefer a tax haven based applicant with deep
pockets who applies for all of the most valuable city strings like .bejing,
.nyc, .tokyo, .london, .paris, .berlin at the same time. I cannot imagine
that ICANN aims to create such a diplomatic nightmare. Especially in the
case of governmental objections ICANN will be very careful and will do
everything to avoid diplomatic implications between countries.

Therefore the only case where I can imagine the auction model to be an
appropriate mechanism to allocate a GeoTLD string is if there are two
applicants, both from the same country and with support of the community and
government. But in any case the best solution would be if both applicants
find an agreement to cooperate.

Dirk Krischenowski
Founder and CEO of .berlin (dotBERLIN GmbH & Co. KG)