Home / Blogs

"Open" or "Closed" Generic TLDs: Let the Operators Decide

Tom Lenard

(The following is an edited version of comments I submitted to ICANN regarding "closed" generic TLDs.)

On February 5th, ICANN solicited comments on whether ICANN should determine the circumstances under which a generic TLD operator is permitted to adopt "open" or "closed" registration policies. Allowing gTLD operators to make these determinations, as opposed to ICANN, will promote innovation on the Internet to the benefit of consumers.

In order to bring the benefits of a competitive TLD market to consumers, ICANN should generally take as light-handed a regulatory stance as possible, as long as it meets its technical responsibilities. A light-handed regulatory approach is consistent with the policy of relatively open entry into the TLD space that ICANN has adopted.

A benefit of the new gTLD program, in addition to providing competition to incumbents, is the ability of the entrants to develop new business models, products and services. Historically, gTLDs have been open, and arguably that openness benefited the growth of the Internet. But at this stage of the Internet's development, adding new options to the status quo is more likely to unleash new forms of innovation. Closed gTLDs may be a promising source of innovations that have not thus far been possible to implement or even envision. Closed gTLDs may, for example, be a way to provide services with enhanced security. No one can know what innovations might be blocked if ICANN generally required gTLDs to be open. In short, adding new open gTLDs is likely to create benefits, but the returns to adding completely new types of gTLDs are potentially much larger.

New gTLDs are valuable economic assets. ICANN should adopt policies that assure that these assets are allocated to their most highly valued uses. ICANN's decision to use an auction when there are multiple applicants for the same gTLD will further that goal. The bidder who believes its business model will be the most profitable will win the auction and the right to operate the gTLD. When there is only a single applicant, that applicant presumably represents the highest-valued use of the gTLD.

The best use of a gTLD can change (e.g., from closed to open) if the initial business model isn't successful or if economic conditions change. This change can be effected either by the current operator or by a transfer of the gTLD to a new operator, subject to ICANN's review. In this way, gTLDs can continue to move to their highest-valued uses over time.

The dangers of ICANN dictating how gTLDs should be used are illustrated by the experience with radio spectrum. Historically, the U.S. Federal Communications Commission allocated blocks of spectrum to specific uses — e.g., broadcast radio and television. Over time, the costs associated with misallocation of spectrum under this "command-and-control" regime became very large. The process of reallocating spectrum to higher-valued uses has proven lengthy and difficult. Although the U.S. and other countries have moved toward a more market-based system, the costs of the legacy system are still reflected in the scarcity of spectrum for wireless broadband uses.

Several commentators have expressed concern that closed gTLDs are anticompetitive. No evidence supports this claim. First, we already have experience with generic second-level domain names — e.g., cars.com — which have provided useful services with no apparent anticompetitive effect. There is no reason to expect anything different from a .cars gTLD. If, for example, General Motors (or any other automobile company) were to operate .cars, it is not plausible to suggest it could thereby gain market power in the market for cars. Note also that both operators and ICANN are subject to the U.S. antitrust laws if they use the TLD system in an anticompetitive way. To the extent that ICANN allows synonyms as gTLDS — e.g., "autos" "automobiles", "motorvehicles", perhaps even "goodcars", etc. — the potential competitive problems become even more remote.

In sum, ICANN should provide maximum flexibility for operators to experiment with new business models. This is the best way to promote innovation on the Internet.

By Tom Lenard, President, Technology Policy Institute

Related topics: ICANN, Top-Level Domains

WEEKLY WRAP — Get CircleID's Weekly Summary Report by Email:


Kind of disagree. Jean Guillon  –  Mar 07, 2013 10:02 AM PST

I am already worried by ICANN allowing an open .WINE TLD to be managed by an operator with absolutely no knowledge about wine so when it comes to allowing the same operator to use such a TLD as a closed one, it worries me even more (.wine is just an example here). I already see the picture: champagne.wine used for the promotion of Californian Champagnes ;-)

Again, if no evidence supports commentators concern that closed gTLDs are anticompetitive, then why didn't ICANN allow this use of closed gTLDs in its first version of the applicant guidebook? Couldn't these uses have been considered right at the beginning: years ago and in a T-R-A-N-S-P-A-R-E-N-T way?

Today, once again, our Community has to face one of these "ratés" and if whoever considers these problems at ICANN, decides that they are not anticompetitive when they are, then it is entire industries which are concerned. And once it is too late: it is too late, there is no way back and the guy who agreed on such decision is gone star-fishing.

To post comments, please login or create an account.

Related Blogs

Related News

Explore Topics

Industry Updates – Sponsored Posts

MarkMonitor Takes a Look at Progress on New gTLD Program in Latest Report

Priority Access Program for Verisign's First IDN New gTLD, .コム

Minds + Machines Group Expands Into Chinese Market

Dyn Weighs In On Whois

New .PET Domain Sunrise Period Begins January 19

Minds + Machines Adds .boston to geo-TLD Portfolio

.CO Hits 2 Million Domains as Premium Sales Surge

Season's Greetings - 2015 End of Year Message from DotConnectAfrica

Neustar's Career Site Launched Under Its Own Branded TLD: 'careers.neustar'

Radix Closes Holiday Sales With Over 35K Paid Registrations

Another Tech Leader Joins .tech

Radix's .ONLINE Fastest to Sell 100,000 Domains

.PRO Domains Now Available to All

The ".law" Domain Gains Momentum Throughout the Legal Profession

Portfolio Update: October Launches and Renewal Rates

"The Market Has No Morality" Sophia Bekele Speaks on Business Ethics and Accountability

We're Moving Forward. You Coming?

City of Miami 3rd in U.S. to Launch Dedicated TLD

Internet Grows to 296 Million Domain Names in Q2 2015

Dyn Comments on ICG Proposal for IANA Transition

Sponsored Topics