A quick report of some of the most important developments coming out of ICANN’s meeting Sydney:

Despite concerns over the way in which ICANN is moving forward with the new TLD launch, it appears that ICANN is poised to start accepting applications for new TLDs in February 2010. If an application is accepted, it is predicted that it will take about 7.5 months before the TLD can be used.

At the meeting, there has been talk of applications for new TLDs such as .MUSIC, .BERLIN, .WEB, .LOVE, .RADIO, .NYC, .BASKETBALL, .ECO, and .FOOD. Wolfgang Puck was even flown out here to promote .FOOD, which was covered by National Journal: Celebs Endorse ICANN Domain Plan.  Even Sydney’s mayor announced that he is looking to get .SYDNEY. Seeing that there is some interest in new TLDs, it is discouraging that ICANN is not slowing down to make sure that if TLDs are introduced, they are done so in a way that does not jeopardize the safety and stability of the Internet. The TLDs should also add value to the space.

There are still questions hanging over the TLD launch process that should be addressed before any applications are accepted. For example ICANN’s new TLD policy stated that a TLD must be a least three characters. How will they implement this guideline with IDNs (Internationalized Domain Names)? “Characters” function differently when using non-ASCII characters. Does the guideline need adaptation? Furthermore, while IRT discussions are very active here in Sydney, the board canceled their IRT briefing meeting. Since the IRT report concerned itself with protection mechanisms, questions remain as to how they will adapt the report to recommendations offered by the Internet community.

While new TLDs remain the hot topic at the ICANN meeting, other serious policies are also being discussed. ICANN has publicly shown that it is committed to ending the Joint Project Agreement (JPA) that exists between it and the US Government, which is set to expire September 30, 2009.

The meeting has also touched upon the idea of vertical integration, which would allow registrars to become registries and could have major consequences on Internet users and on market performance as competing registrars may resist offering TLDs sponsored by their competitors.

Overall, the policies being discussed at ICANN all address complex issues that require thoughtful and thorough consideration. However, as Steve DeBianco wrote in his own blog entry, “ICANN often deems that meeting its own deadlines is more important than achieving real consensus on serious issues.”

ICANN claims that the roll out of new TLDs is designed to encourage healthy competition in the domain name space, but the organization has repeatedly failed to provide evidence that substantiates these claims. Furthermore, ICANN has not put forth any evidence to suggest that the new TLDs will be even somewhat beneficial to the wide Internet community. I regularly work on these issues and have read countless documents and letters pertaining to the TLD launch.  There are two documents from a few months back that are of particular interest. The first is a letter from the Department of Commerce to Peter Dengate-Thrush, the chairman of ICANN’s Board of Directors. The second is a letter from the Department of Justice to the National Telecommunications and Information Administration (NTIA). Both letters provide a laundry list of areas where ICANN needs improvement, better foresight, and an overall reality check.
 
The DOC’s letter states that while they acknowledge “the effort and hard work involved in producing the documents currently out for comment, it is unclear that the threshold question of whether the potential consumer benefits outweigh the potential costs has been adequately addressed and determined.” One of their recommendations is that ICANN must “ensure that the introduction of a potentially large number of gTLDs, including internationalized top level domains, will not jeopardize the stability and security of DNS.” Given the rampant cybersquatting that occurs among the current TLDs, and the amount on .com alone, I don’t know how ICANN will justify introducing even more TLDs without first addressing the existing problems. 
 
Then there’s the issue of competition. The letter from the DOJ points out that the overwhelming popularity of .com is far too valuable to ever actually be constrained by new TLDs. Even in the current system, most domain owners register other TLDs in order to augment their Internet presence, not as a substitute for a .com name. Both letters implore ICANN to reevaluate the demand for new gTLDs and to better account for the interests of consumers. The brand owners and individuals who register domain names are, in this case, the consumer. Yet ICANN seems to be moving full steam ahead toward this initiative. If ICANN is not listening to consumers or to the government that acts as its advisor, who is ICANN actually listening to? With the DOC joint project agreement scheduled to terminate this September, what is the likelihood that ICANN will be listening to anyone in the future?

The Technology Policy Institute (TPI), a Washington-based think tank that is focused on “the economics of innovation, technological change, and related regulation in the United States and around the world,” recently released a study on ICANN titled “ICANN at a Crossroads: A Proposal for Better Governance and Performance.”

The study rightly recognizes that “although ICANN has control over extremely important aspects of the Internet, it is largely accountable to no one.” It also accurately observes that, “no organization with ICANN’s level of responsibility operates with the independence that ICANN enjoys, even under the current arrangement of nominal oversight by the U.S. Department of Commerce,” and that, “ICANN’s proposal for complete privatization and termination of the DOC’s oversight would make the accountability problem worse.” However, the study’s recommendation that ICANN should be restructured so that it is governed directly by the registrars and registries is deeply flawed.

For all intents and purposes, the registrars and registries already hold the reigns at ICANN, and the policies that come out of the organization tend to favor these contracted parties. The problem is that the interests of the contracted parties are oftentimes contrary to those of the rest of the Internet community. This is the reason we see decisions such as the one to open up the domain name space to new TLDs: a scenario that’s great for contracted parties (who get more inventory to sell and get to regulate how it is sold) but will probably mean nothing but confusion and increased enforcement costs for Internet users and brand owners. Unfortunately, things are likely to get worse—the GNSO, a significant policy making component of ICANN, was recently restructured to solidify the voting power of contracted parties.

ICANN is supposed to represent the diverse interests of its constituencies: the suggestion that governing power should be handed over to just two of those constituencies whose interests conflict with the other constituencies does not represent the best way to restructure ICANN. Think about it—in what other market do the same folks who make money off the product sold also set the policy that governs its distribution?

The problematic policies that are coming out of ICANN are a result of a broken system; when one particular group comes into power in an organization and governs according to its own economic interests instead of working to ensure a stable and secure space, you run into trouble.

There is no question that it is time to rethink ICANN, but I would assert that ICANN should be structured according to a system of checks and balances that will ensure that the needs of the wider Internet community don’t get sidelined by the business interests of contracted parties. We need a better-regulated system where Internet users and those representing the wider Internet community have a greater role in governance.