comments on 'an economic framework for new gTLDs' paper

[k claffy <kc@xxxxxxxxx>]

This second economic report posted 16 june
( 
http://icann.org/en/topics/new-gtlds/economic-analysis-of-new-gtlds-16jun10-en.pdf
 )
is an improvement over the June 2009 reports by Dennis Carlton
( 
http://www.icann.org/en/topics/new-gtlds/carlton-re-proposed-mechanism-05jun09-en.pdf
 and 
http://icann.org/en/topics/new-gtlds/carlton-re-kende-assessment-05jun09-en.pdf 
)
but there are still too many -- and too fundamental -- flaws for it 
to serve as the basis of any ICANN policy on new gTLDs:

(1) Like the Carlton report, the authors still seem to think one
way to "evaluate" concerns raised by others is to dismiss them
without further study.  George Kirikos observed one reason for the
similarity between the two reports -- there was overlap in authorship.
Despite the loud complaints that the previous report was not
sufficiently objective, ICANN commissioned a second report that was
ultimately co-authored by the same company 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.

(2) Both reports follow the philosophy of "if we don't know what
the impact might be (of expanding the number of gTLDs in the root
zone), then go ahead", rather than a more conservative approach of
studying how proposed changes may impact security and stability.  
As TBL said in his 2004 comments: ``..because the DNS tree is so 
fundamental to the Internet applications which build on top of it, 
any uncertainty about the future creates immediately instability and harm.''

(3) All empirical data actually analyzed in the report provides
evidence that new gTLDs have not thus far achieved what ICANN
claimed/expected they would do.  There is no coherent logic for the
report's conclusion that additional new gTLDs will have a benefit
that exceeds their cost.  The authors admit their empirical
investigations were 'cursory examinations' at best, and seem to go
out of their way to avoid quantifying effects that are amenable to
more rigorous analysis, instead using vague speculative language
like "might", "could", "have provided some value (to registrants)".
For example, it would be helpful to have a cost analysis, albeit 
imprecise but with defensible (transparent) reasoning through actual
numbers, for new gTLDs similar to what bill herrin did for routing 
announcements (w caveats): http://bill.herrin.us/network/bgpcost.html

(4) On page 39 the authors claim that:

        But if new gTLDs fail to have adequate trademark protections
        or if an innovative new gTLD were introduced that attracted
        large numbers of registrants either because it competed
        strongly with .com or because it reached a niche market
        segment that was previously underserved, then infringement
        rates and/or cybersquatting costs could rise significantly.85

which amounts to  "if the gTLD is successful, then the costs will
exceed the benefit", a rather self-defeating argument for new gTLDs
in principle. 

(5) The authors' argument that we should allow new gTLDs despite
the overwhelming evidence that new gTLDs have never served their
intended purpose because they will enable "innovative business
models" begs the question -- what kind of business models, and who
is going to pick winners since you also later acknowledge that
ICANN will have to stop somewhere, and should only proceed 
incrementally, adding a few gTLDs at a time and developing methods
to measure and modify policy in response to harmful impacts over 
time, e.g., consumer confusion .

(6) the authors propose a large number of research and data analysis
projects, all of which they deem 'low priority', i.e., unimportant,
mainly because such projects won't change their preliminary assumptions
and preemptive conclusions, and for many of the studies they proposed,
it would not be possible to get the needed data for the study anyway.

(7) the report's recommendation to "proceed incrementally" -- begs 
the question of how priority is decided -- and other obvious media
ownership questions such as why 'ownership' of a desirable gTLD would 
be permanent, rather than a lease, like with spectrum?  on page 61, 
the authors further weaken their case:

        "Because of the uncertainty surrounding the introduction of
        innovative new products and business models, it is difficult to
        analyze or predict the costs and benefits of any particular new
        gTLD, but one can analyze generally the expected costs and
        benefits of various types of new gTLDs."  

this indeed is the kind of analysis one would expect from any 
economic study of the impact of new gTLDs, but the authors barely 
scratch the surface on how such an analysis might be undertaken

(8) at a stronger priority, the report calls for hard empirical
data, with no description of which data, how such data would be
shared, analyzed, used, and protected, why this data is what is
needed to inform policy, oand how it will do so.  the report is
silent on all of these more fundamental questions.

(9) George Kirikos also points out in his scathing comments
[ http://forum.icann.org/lists/economic-framework/msg00000.html ]
that the ICANN-commissioned report, despite having academic
authors, seems to eschew scholarship, by failing to cite related 
work and how it compares to the authors' own results, and avoiding 
discussion of (or discounting) empirical data that sheds doubt on 
the wisdom of what ICANN has made clear it plans to do anyway.

(10) Similar to my observations of what's happening in the security and
stability discussion of root scaling, ICANN's behavior looks like
it's trying to buy rubberstamps of its current plans from commercial
consultants, rather than foster what is needed in the long term: a
coherent field of objective, peer-reviewed technical, policy, and economic
research on Internet naming and numbering, and incentivized data-sharing
to support such research.

kc
caida/ucsd