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17 Dec 2014

What would you do with $50 million? ICANN

ICANN got over 1900 applications for new TLDs, and several hundred of those applications were from different people who wanted the same names. Since everything about the new TLDs is complicated, the rules for handling name conflicts are complicated.

When several people applied for the same TLD string, first they checked that the applications all meet the technical and business requirements, and knocked out any that didn't pass. (As far as I can tell, all of the contending applications passed.) Then they checked if one of the applications is a "community" application and the rest aren't. For competing regular non-community applications, they explicitly encouraged applicants to negotiate directly or stage their own private auctions, which some of them did. Failing all that, the ICANN auction is literally the last resort. In the private auctions, the losers split the money paid by the winner, while in the ICANN auction, ICANN keeps allthe money, so everyone expected conflicts resolved through a combination of back room deals and private auctions.

There have been some deals and private auctions, but it was quite a surprise that, even so, a lot of high value names are going to ICANN auctions, and they're making a whole lot of money for ICANN. According to ICANN's auction website, they have netted $26.7 million so far, after paying their auction provider a rather generous $1.8 million.

There are a bunch more highly competitive auctions coming up, including one with nine applicants for .BLOG, 12 applicants for .APP, possibly as many as 9 for .WEB/.WEBS, and so forth. Considering the results so far, I expect the total to be upwards of $50 million. The money's in a (conceptual) reserve account and the board will eventually decide what to do with it.

So far there have been a variety of good and bad ideas about what to do with it. As far as I'm concerned, a good idea benefits the world in general, while a bad idea only benefits ICANN or its contracted parties.

One plausibly good idea is to use it for what's known these days as capacity building in less developed countries. (Old timers may know it as development in the third world.) There are certainly parts of Africa, Asia, and Central and South America that still have terrible Internet access. If there were some way hire an arms length development agency to fund mobile networks and the necessary supporting infrastructure without too much of the money being siphoned away to overhead and corruption, that could be a reasonable use for $50M.

There are other training and capacity building possibilities, but most of them are likely to cause ICANN mission creep. Even if they could pay for, say, security training, the world really doesn't need for ICANN to become yet another security trainer.

A bad idea is to establish a new registrar in Africa. It's true, there aren't very many of them (one each in Burundi, Ghana, Senegal, Morocco, and three in South Africa), but so what? The existing African registrars charge about the same as everyone else, and for anyone in Africa who wants to combine domain names with other services, the normal approach is to resell some other registrar's services, most likely from another country. (For my users, I resell Tucows who are in Canada, even though I'm in the U.S.)

A really bad idea I've seen proposed is to use the money to make up shortfalls in ICANN's budget due to registrations in new TLDs being below predictions. (This has also been proposed for the much larger pile of left over money from new gTLD applications.) It doesn't take a lot of accounting expertise to figure out that an organization needs to pay for ongoing operations out of ongoing revenue, or it's not going to be ongoing for very long.

I've been scratching my head trying to come up with other good ideas, with very little success. Any suggestions?

  posted at: 22:36 :: permanent link to this entry :: 0 comments
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