U.S. Government Has Domainers’ Backs: Analysis

Documents from U.S. Government question ICANN’s actions.

You’ve probably read a lot regarding ICANN’s introduction of fresh top level domains. Now, as noted over at DNJournal, the U.S. Government is weighing in. Domainers ought to be happy with its response.

I just completed reading the U.S. Department of Justice and Department of Commerce responses to ICANN’s plans. These are perhaps the most knowledgeable and well crafted responses to the plan I’ve seen, in part since they aren’t filled with self-fulfilling comments. You ought to really take the time to read them.

Here’s the ultimate kicker: it is ICANN’s memorandum of understanding with the U.S. Department of Commerce on which ICANN bases its need to introduce fresh TLDs. ICANN claims that the memo requires it to create competition, and that specifically means introducing fresh TLDs. Now the Department of Commerce is saying the way ICANN is going regarding it is actually anti-competitive.

Did ICANN not run this scheme by the Department of Commerce ahead of investing $10 million in it? I suppose it wants to be disassociated with the DoC and U.S. government, but it seems rather silly to not even discuss it beforehand.

Here’s what the government states:

1. Fresh TLDs will not create competition for .com. .Com has benefited from the “network effect” and will not be unseated by a fresh TLD. It hasn’t happened to date and won’t now. People register alternatives to .com mostly as a protective measure to complement their .com domains.

2. The way ICANN is introducing fresh TLDs specifically won’t encourage competition. By not considering the terms the registries will offer to consumer who purchase the domains, ICANN isn’t putting consumers first and creating true competition. Price caps must be included in registry proposals to spur competition.

3. ICANN must guard against market power. This hits domainers’ main concern, variable pricing, on the head. The government points out that .com has “market power” and if left unchecked the registry (VeriSign) could charge whatever it wanted. It even points out that “variable pricing” could be employed to charge people more money if they needed the domain more. It specifically identifies firms that are protecting brands and people who have spent time creating web sites.

4. The U.S. government went further than discussing fresh TLDs and stated that ICANN ought to not provide an “assumption of guaranteed renewal” to existing registries. In current agreements, operators of .com, .info, etc. are given a guaranteed right of renewal assuming they do not commit any material contract breaches. As the government points out, this hardly gives the registries a reason to compete and lower prices. The government also states ICANN’s claim that a guaranteed right to renew encourages a registry to invest more in the domain is false. Registries will still invest — perhaps even more — if it knows it will have to compete to renew its contract.