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Wednesday, March 11, 2009

ICANN engages Carlton on new gTLD pricing

Internet Corporation for Assigned Names and Numbers (ICANN) has commissioned an independent third-party report and retained Dennis Carlton, who is a Professor of Economics at the University of Chicago, to examine the preliminary reports on competition and pricing of the new Generic Top Level Domain (gTLD).

Prof. Carlton had between 2006 and 2008, ranked the highest economist in the Antitrust Division of the United States Department of Justice and is a Senior Managing Director of Compass Lexecon, a prestigious economic consulting firm that specializes in competition matters.

Also, Carlton has prepared two preliminary reports relating to the introduction of new gTLDs. In one report “Preliminary Report of Dennis Carlton Regarding Impact of New gTLDs on Consumer Welfare,” he stated “I conclude that ICANN’s proposed framework for introducing new TLDs is likely to improve consumer welfare by facilitating entry and creating new competition to the major gTLDs such as .com, .net, and .org. Like other actions that remove artificial restrictions on entry, the likely effect of ICANN’s proposal is to increase output, lower price and increase innovation.

“This conclusion is based on the fundamental principles that competition promotes consumer welfare and restrictions on entry impede competition,” he said.

The other report, “Preliminary Analysis of Dennis Carlton Regarding Price Caps for New gTLD Internet Registries,” addresses pricing issues associated with new TLDs.
Prof. Carlton had submitted that price caps or ceilings on prices charged by operators of new gTLD registries are unnecessary to insure competitive benefits of the proposed process for introducing new gTLDs.

“I further conclude that imposing price caps on the registries for new gTLDs could inhibit the development and marketplace acceptance of new gTLDs by limiting the pricing flexibility of entrants to the provision of new registry services without generating significant benefits to registrants of the new gTLDs,” he said.

ICANN encourages the community to read both reports, as a public comment forum has been opened on these preliminary reports prepared by Professor Carlton for 45 days, until 17 April 2009.

The complete “Preliminary Reports and Public Comment Forum could be found at: http://www.icann.org/en/public-comment/public-comment-200904.html#compri
ITRealms Online recalls that after years of discussion and thought, new generic top-level domains (gTLDs) are being expanded.

They are anticipated to allow for more innovation, choice and change to a global Internet presently served by only 21 generic top-level domain names and as a not-for profit corporation dedicated to coordinating the Internet’s addressing system, ICANN is not doing this to add to its revenue.  

However, an implementation plan is being developed with opportunities for public comment, where there will be processes for objections. There has also been detailed technical scrutiny to ensure the Internet’s stability and security. There will be an evaluation fee but it will recover costs only (expenses so far, application processing and anticipated legal costs).

Promoting competition and choice, according to the Director of Media Affairs, Corporate Affairs at ICANN, Brad White, is one of the principles upon which ICANN was founded.

“In a world with 1.5 billion Internet users and still growing, diversity, choice and innovation are key.  The Internet has supported huge increases in choice, innovation and the competition of ideas, and expanding new gTLDs is an opportunity for more,” he concluded.

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