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ICANN's Net Obligation

In a previous column, I suggested that the cost of adding new top level domain names (TLDs) could be quite high for businesses and existing trademark owners, not just financially, but also in terms of vigilant policing on the Web for trademark infringement. I also suggested that merely adding additional TLDs might not get at the root problem in addressing the perceived scarcity of domain names.

This installment looks at some of the history that has taken us to this point, the means by which Internet Corporation for Assigned Names and Numbers (ICANN) could reassign content providers, and offers some reasons why those reassignments may be unlikely to occur.

Dating at least as far back as 1996, the United States Department of Commerce was committed to facilitating the 'Information Superhighway' as a private sector development. [See 'A Nation of Opportunity: Realizing the Promise of the Information Superhighway' (GAO 1996)]

Within two years following this white paper's publication, Commerce entered into a 'Memorandum of Understanding' with ICANN regarding private development of domain names. In the Memorandum, ICANN was assigned the tasks of increasing competition and facilitating international participation in the domain name system. [See Section IIA of the memo.]

ICANN is a California non-profit corporation. [A copy of its bylaws are available here]. It operates as an independent corporation, free to contract with whomever it wishes and upon which terms it decides are appropriate.

In the United States, private parties such as ICANN possess the freedom to contract on negotiated and negotiable terms. They can routinely specify the performance that they expect from one another in their contractual relations. A party in a superior bargaining position will be allowed to make decisions about the other party?s performance, provided that the bargain is fundamentally fair. And, absent some abuse, courts generally will not step into the fray to set aside the agreement.

From inviting new domain name proposals to policing the conduct of Internet businesses, ICANN wields considerable authority in how Internet commerce is accomplished. With the authority delegated to it to assign top level domain names, and the power to control the routing of almost all Internet traffic, ICANN could literally destroy a Web site?s value with the flip of a switch.

This power also gives ICANN considerable muscle in policing the Web against abuses. ICANN can enforce its directives with contract provisions designed to implement its policy decisions. Thus far, the body has acted with moderate restraint, using its might to enforce registrants to comply with the Uniform Domain-Name Dispute-Resolution Policy in exchange for name assignment. However, there is little doubt that it could become more active, and the creation of additional TLDs is one place where that could occur.

The Need for Additional TLDs

Initially, there were just four TLDs available to private users for registration: dot-com, dot-edu, dot-org, and dot-net. The limitation to four TLDs produced considerable criticism as the market for the reselling of registered domain names blossomed, and as the number of useful names under the existing four TLDs became registered and unavailable.

When a simple name registration could be sold for hundreds of thousands -- if not millions -- of dollars, the cyber-real estate market really heated up. A quick search of domain names for sale on eBay shows that the market for reselling domain names is still strong, and competition to register the next multi-million dollar name undoubtedly causes concerns of scarcity. With the recent decision by ICANN to add seven new TLDs, there will undoubtedly be more domains up for sale in the years to come.

While the need for additional TLDs may be debatable, the articles at ICANNWATCH cogently argue some of the reasons to increase their number.

Is Dot-News or Dot-Sex the Answer?

Why not create a TLD called 'dot-news' and assign all news organizations to it? Or, put all Web sites with pornographic content at 'dot-sex'? Good arguments can be made on both sides of this debate. For example, grouping pornographers in a single TLD would make it easier for parents to filter and block access to these sites to protect their children; and, mature audiences looking for pornography would have little difficult finding the sought-after sites. Likewise, news Web sites could equally be blocked or located by a dot-news TLD.

Given ICANN?s ability to control Internet traffic, it could be technically feasible to coerce reassignments to alternative TLDs by contract. But there would be practical problems that make such proposals unlikely to succeed.

First, what would happen to a mixed-use site? If a portal offers links to world news or the weather, would it be reassigned to dot-news? Would a site with an essay about breast cancer be reassigned to dot-sex? And, who would make these determinations, and under what criteria? The transactional costs alone in making the assignments and reassignments have the potential to bog down the speedy and efficient registration process.

From short-term uncertainty to tremendous confusion, reassignment could quickly cause the Internet to fall from favor, and substantially fail to meet the Commerce Department?s projections and expectations.

Second, existing registrants have spent vast fortunes developing brand recognition at their sites' present locations. Even with redirection through the browser, the need for existing registrants to expend additional sums to relocate their cyber-businesses from one URL to another is often more onerous and costly than a change in a physical location. The resistance from existing businesses is therefore likely to be immense.

Third, ICANN must act with restraint. It has considerable power to affect e-commerce and e-business. Its policy directives will substantively affect many in the online community. But, it must continue to exercise its powers with restraint or risk having those powers taken from it.

From the make up of its members to the hearings that it conducts in advance of setting policy, it must demonstrate that it is a legitimate partner with users, businesses, and governments. Assignment of new TLDs is just one area where it must be vigilant, or it will face increasing criticism. [See Jonathan Weinberg, 'Review of the Domain Name Supporting Organization']