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 




  

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