DSTI/ICCP/TISP(2004)2/FINAL 

should be allocated but it does discuss the potential economic implications for differing levels of new 

gTLDs against the criteria ICANN has drawn up for establishing allocation procedures.  

In reviewing the available allocation mechanisms two leaders emerged: auctions and comparative 

selection procedures

52

. It is possible to envisage other mechanisms, such as lotteries, but these are little 

used by OECD governments where allocative choice is required. Before considering the pros and cons of 

auctions and comparative selection procedures several questions need to be addressed. Some of these 

involve future decisions to be taken by ICANN and can have potential impacts for which allocation 

mechanisms and procedures are adopted. The first issue is to precisely define what resource is being 

allocated and the second to make an assessment of the scarcity of that resource. 

What resource is being allocated? 

The domain name resources being allocated by ICANN are the existing and new gTLDs and the right 

to act as a registry for a specific top level domain name in either category. In the case of gTLDs which 

predated ICANN, the resource in question is clear. ICANN inherited a series of gTLDs (

e.g.

.com

, 

.net

and 

.org

) and has made a series of allocative decisions to continue with the incumbent registry (

i.e.

.com

and 

.net

) or transfer responsibility to another registry (

i.e.

.org

). Prior to June 2005, ICANN needs to 

revisit the allocation of 

.net 

and

make an allocative choice in respect to which entity will continue to 

operate that gTLD.  

In the case of new gTLDs there are a greater range of decisions that need to be taken in defining the 

resource for existing gTLDs. During ICANN's first round of new gTLDs, the entity wanting to operate a 

registry for a new gTLD proposed a string or range of strings in order of preference. In this process the 

ICANN Board also took a decision that it did not want to allocate more than one string to any single 

applicant at the so called `proof of concept' stage. For the future, ICANN must decide whether to continue 

these practices or to use alternative procedures.   

Potential alternative procedures include separating the selection of proposed strings from other 

considerations (

e.g.

 qualifications for operating a registry). In an auction, for example, qualified 

prospective registries might bid for the right to self select one or more strings. In a comparative selection 

procedure a candidate meeting all technical, financial and other qualifications might also be able to self 

select a string or strings at a separate stage. Either of these procedures may give the market a greater role in 

the selection of strings. On the other hand, some stakeholders may want a procedure that continues to have 

an element of oversight in the final approval of strings, unless guidelines address their concerns. 

In the first round of new gTLDs it is worth noting that a purely market based outcome would have led 

to different strings. SITA, for example, proposed 

.air 

as a first choice

and were awarded

 .aero, 

one of their 

alternative preferences.

In this case the ICANN Board felt that `

.air

' was `too generic' and that a more 

specific term would be more appropriate.

53

 In another case, a successful registry was not awarded their first 

choice (

.web

) but one of their other preferred names (

.info

).

54

 One consideration was the use of 

.web

 in an 

alternative root.  In other cases proposed strings were excluded because they contravened the advice of one 

of ICANN's advisory groups. An example, was the exclusion of 

.per 

due to GAC advice that three letter 

country codes should be avoided (PER is the three letter country code for Peru). 

It is important to remember that ICANN's first round of new gTLDs was essentially a trial. The 

decisions taken, while no doubt challenging, were probably made easier by being able to apply a stricter set 

of criteria related to `proof of concept' criteria. Even for the most favoured strings the question could be 

posed  does this help inform the `proof of concept' . For the future ICANN will need to decide how 

closely to bind the selection of a string with the operation of a registry function. Some entities may wish, 

 39