DSTI/ICCP/TISP(2004)2/FINAL 

Auctions could be viewed as unfair given earlier or parallel allocation procedures 

It might be suggested that equity is not well served by auctioning the right to operate new gTLDs 

when previous procedures have not employed this allocation tool. One such objection might be that a firm 

that paid an entry fee, during a comparative selection procedure, may have an advantage over a firm that 

paid a higher price using an auction. While it does not necessarily follow that a higher price would be paid, 

any such outcome would occur with bidders being fully aware of current market conditions. In other words 

bidders will factor this knowledge into their decision to bid and the price they are willing to pay.  

A more substantive objection might be raised in the case of parallel allocation procedures. The case of 

a `tie breaker auction' can be placed to one side as this is an adjunct rather than a parallel allocation 

procedure. If parallel allocation procedures were placed in force, with one process using an auction and the 

other using comparative selection, the question of equity could be raised. If ICANN wanted to continue to 

use comparative selection, for a certain type of new gTLD (

e.g.

 sTLDs), it would need to address the 

question of equity if auctions were also employed (

i.e.

 for prescribed or unprescribed strings). Any parallel 

procedures might provide an incentive for operators to misrepresent their business case as being worthy of 

inclusion under sTLD criteria when it would be more appropriate for an unsponsored gTLD procedure. 

Comparative selection: Pros and Cons 

Comparative selection procedures, sometimes called `beauty contests' can be structured in a number 

of different ways. Usually they involve an up front fee to discourage frivolous applications and to recover 

the cost of the allocation process. Other aspects commonly include a requirement to indicate the 

prospective operator's credentials and to specify how they would operate the resource in question. In the 

case of sponsored strings, applications also involve making a case that the new sTLD would be beneficial 

to a community. These factors are then assessed against the criteria which ICANN has set for the 

introduction of new gTLDs and decisions made on the new gTLDs to be introduced and their operators 

from the field of applicants. 

Advantages 

Equity 

It can be argued that there is equity in a comparative selection procedure in that all participants are 

judged by the same criteria and face the same information requests. The experts that review the 

submissions are required to treat them in an objective and non discriminatory manner. Nevertheless, 

judgements over proposals that are equally meritorious, in all aspects, would still require some type of 

subjective judgement to be applied. This could be the case, for example, where there were multiple and 

equally meritorious proposals for the same string.  On the other hand, it may not be a drawback if the issue 

of the string was dealt with separately from the qualifications of a prospective registry. In the latter case, 

the only limitation would be the number of gTLDs available for qualified candidates rather than the merit 

of candidates for the same new gTLD. 

One additional aspect can be mentioned in relation to equity. This is only relevant in those instances 

where any objectives ICANN may have for new gTLDs go beyond technical co ordination. The procedure 

for sponsored TLDs essentially adopts a comparative selection procedure as a way to deal with specific 

groups that want a TLD. Although sponsors suggest specific strings, they may be in competition with each 

other if the number of available new gTLDs is exceeded by the number of worthy and qualified applicants. 

Other examples can be imagined for new unsponsored gTLDs. Comparative selection, for example, might 

lend itself more easily to ICANN being able to get a more diverse geographical spread for new registries or 

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