On economic frameworks for gTLDs

August 11th, 2010 by kc

[I submitted the following public comment to ICANN in response to their second attempt at commissioning An Economic Framework for the Analysis of the Expansion of Generic Top-Level Domain Names. I’ll link to ICANN’s summary of all public comments on this report when available. -k]

This second economic report posted 16 june (pdf) is an improvement over the June 2009 reports by Dennis Carlton (pdf, 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, with caveats: (See What does a BGP Route cost?).
  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.

    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, and 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 (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.
  11. kc

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