[At-Large] Auction Proceeds - where we are and what you can help

bzs at theworld.com bzs at theworld.com
Mon May 15 19:14:11 UTC 2017

On May 15, 2017 at 13:21 kankaili at gmail.com (Kan Kaili) wrote:
 > Hi, 
 > Thank you for your comments.
 > As you mentioned, even at USD $175K per application, there were 1400 of them, which is indeed a lot.  From a commercial point of view, this may be interpreted as the fee is too low.  

It wasn't a commercial comment so much as a managability comment and a
concern for the security and stability of the internet forward.

Although the DNS system can certainly handle 1,000+ new TLDs,
technically, it remains to be seen whether this serves the public
interest. And can ICANN handle the interface with 1,000+ new gTlDs
soas to serve that public interest.

I suppose that begs the question of "then how many would be right?"

As many predicted we're seeing these 1K+ nTLDs becoming a rather steep
(downwards) long tail. A handful seem to be gaining some traction, the
rest seem to be struggling for an audience.

My concern is that this long tail will produce many insolvencies
leaving registrants with an unstable future.

Time will tell. I'll admit this hasn't happened once thus far. I was
reminded this did happen several years ago with one registry, .PRO,
but since it was just one registry it was handled fairly easily, just
handed over to another larger registry. That may not be a reasonable
expectation if hundreds of registries become insolvent.

 > However, ICANN is not a commercial entity.  Furthermore, ICANN is the ultimate authority of the DNS industry, pretty much like the government, which can also be understood as a natural manopoly.  Thus, the law of supply and demand should not be used in its policy decisions.
 > This reminds me of the 3G radio spectrum allocation process during the 2000s.  At first, some governments auctioned the 3G spectrum, which brought in billions of Euros for the government's treasury.  However, immediately there were loud complaints that this in turn translated into substantial higher fees for the ordinary consumers/ end-users.  Thus, other governments later took the "beauty contest" approach.  That is, a panel decides the suuccessful contender based on the service to be provided to the public.  Of course, there were also hybrid approaches, e.g., using an auction appoach to short-list the applicants, while the final decision being made via "beauty contests".
 > This example shows that, ICANN, being an NPO working for the public interest, should not consider its own financial interests as the basis on policy decisions.  Also, the law of supply and demand should not be applied either, especially as ICANN is a natural monopoly.

It's not clear whether ICANN's financial interests would be improved
by a much higher gTLD application few. There likely would have been
many fewer applications. We can only guess. I suppose one could argue
that their "margin" per new gTLD would have improved but that's a
relative observation.

(note: "beauty contest" is a term of art in economics and game theory
and I believe that's what's being referred to here, look it up in
wikipedia if you are unfamiliar.)

My feeling is a much higher application fee would have avoided so many
seemingly frivolous gTLDs and ensured only those with greater
financial stability and commitment, and thus likelihood of
success. And of course simplified the interface with registries. Thus
avoiding any need for a beauty contest round towards the end.

This may seem like Monday morning quarterbacking (pick your favorite
sport :-)) but it's worthwhile considering as another round of new
gTLDs proceeds, and in terms of the stability and security of this new
crop of gTLDs forward.

 > Thank you again.
 > Kaili

        -Barry Shein

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