ICANN

This week here on the gTLD Strategy blog, we’re going to be talking finance. Specifically, we’ll be breaking down the costs of applying for and operating a new gTLD, the application questions that deal with finances, and a little thing called the Continuing Operations Instrument (COI). Today, we’re going to discuss the COI and the options applicants have available to them.

As we mentioned in yesterday's post, the Applicant Guidebook requires all applicants to submit the same information, regardless of whether they are multinational corporations with billions of dollars in revenue, or globetrotting groups of entrepreneurs scrambling to find investors willing to back their .IDEA.

Given the diversity of not only potential applicants, but also the sizes of their new gTLD registries, ICANN developed an inventive yet controversial insurance policy designed to maintain critical registry functions in the event that one of these new gTLDs fails. That is the Continued Operations Instrument (COI); it is described in the New gTLD Agreement Specifications (number 8), and forms the basis of applicants’ answers to Question 50. Although to date, no existing registry has ever failed outright, the odds of failure are likely to increase with potentially hundreds of or even 1,000 new gTLDs launching within the next few years. Thus, each applicant is responsible for setting aside a “rainy day fund” to ensure failure does not adversely affect domain registrants. Even applicants that plan to run closed, "single registrant" gTLDs with no other “registrants,” per se, will have to demonstrate a COI.

The COI has been a point of contention within the Internet community, as many potential applicants rightly feel that it puts an undue burden on those who are not sitting on millions or billions of dollars in cash supplies. The ongoing debate centers around the Registries Services Group’s proposal to replace the COI with a Continued Operation Fund (COF), a more socialized insurance model that would require each applicant to put $50,000 into a general fund, to be drawn upon in the event of any registry’s failing.

While this debate remains unsettled, applicants should continue to move forward following the current COI requirement described in Question 50. The amount of the COI will depend on the registry services provider chosen by the applicant, because it must equal three years’ worth of costs to run critical registry functions. ICANN notes that it is building a model for these costs, though we haven’t seen anything yet, likely due to the aforementioned ongoing debate.

ICANN has provided applicants with two options to meet the COI obligation. The first is to secure an irrevocable standby letter of credit from a reputable financial institution – “reputable” meaning it has been rated AA or better. The letter of credit must have a term of at least five years from when the gTLD is delegated.  The second option is to park the funding in a cash escrow account, held by a similar financial institution and with an equal term.

Those applicants that have a substantial line of credit at their bank and don’t wish to set aside potentially hundreds of thousands of dollars may spring for a letter of credit. On the other hand, applicants not especially excited about paying interest on a letter of credit for three or four years may wish to go the cash escrow route – the “set it and forget it” option, if you will.

Another important decision applicants face is when to secure their COI. If they secure it prior to submitting their applications, they will receive a score of 3 points on Question 50 and pass the financial capability section with a minimum score of 1 point on each of the remaining five questions. Applicants that decide to wait until they contract with ICANN will receive a score of 1 point on Question 50, and will thus need to score 2 points on two of the remaining five questions. The required responses and documentation will be a bit more stringent for those that choose the second option, and we’ll leave that conversation for tomorrow’s post.

This week here on the gTLD Strategy blog, we’re going to be talking finance. Specifically, we’ll be breaking down the costs of applying for and operating a new gTLD, the application questions that deal with finances, and a little thing called the Continued Operations Instrument. Today, we’re going to get started with the cost breakdown.

At this point, it’s common knowledge that it costs a cool $185,000 to apply for a new gTLD. But what exactly does that sum cover? Essentially, it amounts to a “pay-to-play” filing charge, and it is really just the cover charge applicants will have to pay to get into the new gTLD club. If the application faces complications like String Contention, any kinds of objections or Extended Valuation, that amount will creep up. (more...)

In the New gTLD Applicant Guidebook, there is a provision that if ICANN receives more than 500 new gTLD applications, then applications will be processed in “batches.” The first batch will consist of 500 applications, and subsequent batches will consist of 400 applications apiece. This batching process is designed to allow the third-party evaluator that ICANN hires to process applications to handle any extended evaluations, string contentions, or any other issues that may arise without overwhelming its capacity. (more...)

Recent attention from the U.S. Congress, as well as negative statements from the U.S. Federal Trade Commission Chairman Jon Leibowitz, have caused some to speculate that the U.S. government will intervene to either stop ICANN's New gTLD Program or delay its launch, currently scheduled for January 12, 2012. (more...)

On Thursday, December 8, the U.S. Senate Committee on Commerce, Science and Transportation will host a full committee hearing on "ICANN's Expansion of Top-Level Domains."

According to the Committee's website, the hearing will "examine the merits and implications of this new program and ICANN’s continuing efforts to address concerns raised by the Internet community." The Coalition Against Domain Name Abuse, the non-profit that FairWinds co-founded in 2007 as an advocate for brand owners in both U.S. and international legislation, has been working with Commerce Committee leaders to prepare for the hearing. CADNA has provided the Committee with background information on the New gTLD Program, and has discussed various issues that may be raised during the hearing. (more...)

It's time to talk about Question 18. We've alluded to it, hinted at it and even warned about it before here on gTLD Strategy, but now, with just over a month until the application period opens, it's time to roll up our sleeves and dig into Question 18 of the New gTLD Applicant Guidebook.

Question 18, or the "Mission/Purpose" question, is all about how applicants plan to use their new gTLD. Applicants must address the following three sub-questions: (more...)

A few weeks ago, we blogged about ICANN's recent reluctance to own up to its role as an advocate of new gTLDs (according to statements by CEO Rod Beckstrom, the organization is just educating people about the new extensions). But over the past few months, as we here at FairWinds have been studying the New gTLD Applicant Guidebook inside and out, we've noticed a few other instances where ICANN seems to be trying to evade responsibility when it comes to new gTLDs. (more...)

A few weeks back, we wrote about the upcoming expiration of the IANA contract between the National Telecommunications and Information Administration (NTIA) and ICANN. At that point, the NTIA had announced that it will be accepting proposals from potential new contractors between early November and early December of this year.

Now, the NTIA has officially issued its Request for Proposal, and it includes a few marked changes from previous iterations of the IANA contract. For one, it includes much more stringent language requiring the contractor disclose any conflicts of interest.But perhaps most surprising to some is the fact that the NTIA will now require the new contractor to be a wholly U.S. owned an operated firm or fully accredited U.S. college or university. Previously, the NTIA had only required that the contractor maintain a physical address in the U.S. (more...)

This is the second post in a two-part series of blog posts explaining String Contention Sets, a complex aspect of ICANN's new gTLD evaluation process.

So you've found yourself in a String Contention Set. Another party has applied for the same new gTLD as you, or one that is so visually similar that ICANN believes that allowing both strings to become full-fledged new gTLDs will cause confusion among Internet users.

Let's assume that the Contention Set consists of you and one other applicant. What happens now? First, ICANN encourages you both to reach an agreement amongst yourselves as to which application will proceed. Both of you can choose to drop out at this point, or one can concede to the other, but there is no way that both applications can proceed with each of you operating a separate registry. (more...)