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New gTLDs – Final Reports Available on Competition and Pricing

ICANN posted today two reports relating to the introduction of new gTLDs, both by Dr. Dennis Carlton:

Both reports are briefly summarized below. A public comment forum has been opened on these preliminary reports prepared by Professor Carlton for 45 days, until 20 July 2009. Post comments to competition-pricing-final@icann.org and view comments at http://forum.icann.org/lists/competition-pricing-final.

Summary: Report of Dennis Carlton Regarding ICANN's Proposed Mechanism for Introducing New gTLDs

This report combines and updates Dennis Carlton's two preliminary reports from March 2009 that address ICANN's proposed mechanism for introducing new gTLDs. This paper analyzes, from an economic perspective, costs and benefits of ICANN's proposed introduction of new generic top level domain names (gTLDs) and addresses concerns raised by the Department of Justice and other parties about the ICANN proposal.

The paper concludes that ICANN's proposed framework for introducing new gTLDs is likely to facilitate entry and benefit consumers by expanding output, lowering price and increasing innovation. Even if new gTLDs do not compete with .com and the other major TLDs for existing registrants, it is likely that consumers would nonetheless realize significant benefits due to increased competition for new registrants and increased product choice. Thus, evaluation of ICANN's proposal does not depend on addressing the extent of competition between existing TLDs, a question posed by the ICANN Board in 2006.

While a variety of commenters have expressed concerns that the introduction of gTLDs will require trademark holders to undertake defensive registrations, alternative mechanisms for addressing such concerns are available. Several proposals are currently being reviewed by ICANN which may address these concerns while precluding the consumer harm that is likely to result from the draconian remedy of restricting entry of new gTLDs. The ability of ICANN to protect trademark holders through dispute resolution mechanisms also implies that price caps on new gTLDs are not necessary to protect trademark holders.

Summary: Comments on Michael Kende's Assessment of Preliminary Reports on Competition and Pricing

This paper responds to the report submitted on April 17, 2009 by Dr. Michael Kende, prepared on behalf of AT&T entitled "Assessment of ICANN Preliminary Reports on Competition and Pricing" which comments on Dennis Carlton's two preliminary reports submitted to ICANN in March 2009. In this reply, Carlton concludes that there is no basis for Dr. Kende's claim that the study of the scope of the market for registration services authorized by the ICANN Board in 2006 is necessary for evaluating ICANN's gTLD proposal. This is because, even if new gTLDs did not compete with .com and other major TLDs for existing registrants, new gTLDs would be expected to result in greater product choice and increased competition for new registrants. Additionally, Dr. Kende provides no basis for concluding that restricting the entry of new gTLDs is the best solution to trademark holders' concerns that new gTLDs will increase the need for defensive registrations. Alternative mechanisms for protecting trademark holders are being reviewed by ICANN that are likely to protect trademark holders interests while preserving the benefits to consumers of entry. In addition, data presented by Dr. Kende appears to exaggerate the need for defensive registrations by failing to distinguish between productive supplemental registrations which attract and maintain traffic from those which are undertaken only to protect trademarks. Finally, this paper explains that there is no apparent basis for Dr. Kende's suggestion that the absence of price caps for new gTLDs will require elimination of price caps for existing TLDs.

New GTLDs and the Internet

Openness Change Innovation

After years of discussion and thought, new generic top-level domains (gTLDs) are being expanded. They will allow for more innovation, choice and change to a global Internet presently served by only 21 generic top-level domain names. As a not-for profit corporation dedicated to coordinating the Internet's addressing system, ICANN is not doing this to add to its revenue.  An implementation plan is being developed with opportunities for public comment.  There will be processes for objections. There has also been detailed technical scrutiny to ensure the Internet's stability and security. There will be an evaluation fee but it will recover costs only (expenses so far, application processing and anticipated legal costs).

Promoting competition and choice is one of the principles upon which ICANN was founded. In a world with 1.5 billion Internet users (and growing), diversity, choice and innovation are key.  The Internet has supported huge increases in choice, innovation and the competition of ideas, and expanding new gTLDs is an opportunity for more.

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Brad White
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Corporate Affairs
ICANN
Ph: +1.202.429.2710
E: brad.white@icann.org

International: Andrew Robertson
Edelman (London)
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E: andrew.robertson@edelman.com


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