Dennis Carlton Agrees with Dennis Carlton Regarding Fresh Domain Names

ICANN releases two fresh papers from Professor Dennis Carlton regarding the economic consequences of releasing fresh top level domain names.

Surprise! When you pay the same person to evaluate critical comments regarding his original work, he decides that his original work was correct.

That’s what happened when Internet Corporation for Assigned Names and Numbers (ICANN) paid Professor Dennis Carlton to evaluate (defend) critiques of his original papers. ICANN just released two fresh papers by Carlton that refute critiques of his original notes.

Here are some of the more interesting tidbits:

1. Carlton states the note that ICANN’s board called for in 2006 to study the competitive advantages of fresh TLDs isn’t really necessary. As it turns out, it doesn’t really matter if fresh TLDs compete with incumbent TLDs such as .com, states Carlton.

2. Carlton reiterates his claims that price caps are not necessary on fresh top level domain names. He even addresses the concerns that incumbent registries could claim “equitable treatment” clauses in their contracts to remove their price caps. Carlton states ICANN has assured him there’s nothing to worry regarding:

We understand from ICANN that there is no basis for this concern. The language in this clause does not require identical treatment among all registries and recognizes that differences across ICANN contracts with different registries can be “justified by substantial and reasonable cause.” ICANN’s contracts with existing TLDs recognize that different practices may be appropriate for different registries and allow ICANN latitude to implement different procedures. I am aware of no statement either by ICANN or the Commerce Department favoring the elimination of price caps specified in existing registry contracts.

Unfortunately, Carlton ignores the history of the existing .com registry contract between VeriSign and ICANN (which is right now the subject of an antitrust lawsuit). VeriSign abused its position by introducing SiteFinder, which resulted in lawsuits between VeriSign and ICANN. To settle the suit, ICANN granted a no-bid contract to VeriSign for .com domain names that included 7% annual price hikes. So to assume that ICANN would just ‘say no’ to VeriSign regarding removing price caps and go on its merry way is preposterous. Furthermore, it may be in ICANN’s interests (but not domain registrants’) to agree to hike .com fees in return for a greater cut of VeriSign’s revenues.

Carlton also addresses price caps in regards to trademark holders having to pay a lot to register their trademark domains with tiered pricing (e.g. Google being charged extra since it has a big name). He states this can be handled through ICANN’s intellectual property protection mechanism. The problem is, Google could “protect” a domain by getting it through UDRP, only to have to pay the registry $10,000 a year to keep it registered.

3. On Page 13, Carlton goes through examples of innovations that could be created using fresh TLDs. One example is a financial services domain that provides secure transactions. But this can be achieved with existing TLDs and laws.

4. In a claim that is sure to raise the ire of trademark owners, Carlton claims that registering typos of your trademarks is not defensive. Instead it’s productive, since it funnels traffic to your main web site. I guess it’s only productive if you don’t let the domains resolve.

There’s a lot more than that. You can read the notes and submit comments. Just be advised that if you make a good argument, ICANN may use more of your domain registration fees to pay Carlton to defend them.