New top-level domain plan dangerous, too costly, critics tell ICANN

A controversial proposal to create hundreds of new generic top-level domains is generating harsh criticism as corporations and individuals question the need for additional competition in the domain name marketplace and expense for businesses.  

The Internet Corporation for Assigned Names and Numbers (ICANN) set Dec. 15 as the final day for comments on its plan to launch anywhere from 200 to 800 new domain name extensions starting next year.  

ICANN says the new gTLDs will provide more innovation, choice and competition on the Internet, especially for non-English language domains. The new domains would be anywhere from three to 63 characters in length and could support Chinese, Arabic and other scripts.  

Although the ICANN plan would allow companies to run their own domains -- such as .microsoft or .ibm -- the idea has been panned by most corporations that have commented on it so far.  

Indeed, many companies and industry groups are urging ICANN to cancel or postpone its plans to add new gTLDs to the Internet.

"Cancel new TLD launch," urged Denise Yee, senior trademark counsel at Visa, in a Dec. 12 letter to ICANN. "Although ICANN is firmly committed to implementing its new TLD program in 2009, there appears to be many unanswered questions related to whether sufficient evidence of demand exists for new TLDs, and if not, whether it is appropriate to launch such a costly initiative."  "The negative consequences of issuing new generic top-level domains will far outweigh any potential benefits," wrote Melissa MacGregor, managing director and associate general counsel of the Securities Industry and Financial Markets Association (SIFMA) in a Dec. 12 letter to ICANN. "These negative consequences include, but are not limited to, consumer confusion, domain name abuse, threatened Internet stability and security, trademark infringement, phishing and an overall devaluation of domains already in existence."  

Most of the criticism of ICANN's gTLD plan falls into two camps: First, that ICANN has failed to provide adequate protections for trademark owners; and second that ICANN is charging exorbitant rates for the new domains.

"ICANN's contemplated expansion of the domain name space will provide marginal, if any, additional benefit to trademark owners while vastly increasing the associated risks and costs," said Daniel Poliak, associate general counsel of Adobe Systems, in a letter to ICANN sent Dec.  

Poliak said trademark owners will need to spend hundreds of thousands of dollars to establish a gTLD for each of its trademarks or risk that another party will purchase the domain to divert its customers.

"All of these efforts will be directed toward enforcing and protecting new gTLDs that are costly and unnecessary for most brand owners, who currently conduct most of their business under the .com regime," Poliak said.

Corporations are worried that so many new domains will cause cybersquatting, counterfeiting, fraud and phishing scams to increase, as opportunists and criminals snap up domains related to their brands.

"The potential for fraud is unlimited," wrote Robert Raines, manager of interactive communications for Chevron, in a Dec. 4 letter to ICANN. "It will create an unprecedented confusion in the consumer market where a consumer will be unable to distinguish which is the valid domain: or sales.IBM."  

Companies are asking ICANN to require applicants for new gTLDs to prove ownership of a trademark before they buy it, and they are seeking notification of trademark owners when third parties submit an application for gTLDs that includes their trademarks. They also want a less expensive mechanism for legally challenging gTLD awards.

The other big concern about ICANN's gTLD plan is cost. ICANN has proposed charging $185,000 for a company to apply for a new gTLD and another $75,000 a year to retain that gTLD in the DNS root zone. Companies say the costs are prohibitive for them to be able to buy all the domains related to their company and product names.

Even community groups and governments that favor new gTLDs, such as New York City and Paris, say the fees are way too high.  

One commentator questioned why ICANN, which is a non-profit organization, needs to raise what could be $100 million or more if the new gTLD program should attract 500-plus applications.

Many commentators also questioned ICANN's variable pricing scheme, which would allow the registrars of the new domains to charge different prices depending on the popularity of a particular domain name instead of the uniform, regulated prices available today in .com or .net.

Critics say variable pricing for new domains is unfair, and they worry that VeriSign would be able to get a similar pricing scheme for .com if it were approved for the new domains. Variable pricing, they say, would create inequities where VeriSign could charge $1 million a year for one domain name such as and only $6 a year for another name like

As of Sunday, more than 90 comments had been filed, and the majority of the comments were critical of ICANN's plan.

The Internet currently supports 21 gTLDs, including .com, .net, .biz and .info as well as 250-plus country code top-level domains such as .cn for China or .de for Germany.

Of the 174 million domain names registered as of Sept. 30, more than half -- or 89.4 million – were registered in .com and .net, according to VeriSign's December 2008 Domain Name Industry Brief.  


Copyright © 2008 IDG Communications, Inc.

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