The introduction of internationalized domain names (IDNs) offers the world one of the best opportunities it will ever have to introduce more diversity and competition into the domain name registry market. That market is currently dominated by VeriSign, which operates the .com and .net domains (as well as a couple of TLDs it bought, .tv and cc) and hence controls about 80% of the gTLD market. It has proven almost impossible to crack the dominance of .com, but if anything can do it, TLDs in new scripts (Chinese, Cyrillic, etc.) responding to entirely new markets can.
Unfortunately, the politics within ICANN are threatening that opportunity. There is a move afoot to give country code TLD registries a free gift of an IDN top level domain. Did I say “a” free gift? That implies only one. But as I will explain later, it may turn out to be two, or three, or maybe six or even twenty free gifts by the time ICANN's Governmental Advisory Committee and CCNSO gets done with it. There's a real danger that this ccTLD fast-track to new IDN top level domains will reinforce incumbent national monopolies. And it's clear that this option is being considered only because ICANN wants to win political support from governments and the increasingly rich and powerful national registries, many of which are state-owned or state-connected. ccTLDs are starting to look like the old national telephone monopolies of old, and the ICANN process seems more and more like the Internet's version of the International Telecommunication Union, a cozy telco club that until 1997 wrote international rules to protect and advance their interests. Look here for the charter of the specially-created, restricted working group on IDN ccTLDs.
What makes this prospect of a free gift for ccTLDs especially objectionable is that ICANN's Generic Names Supporting Organization has just completed a proposal to allow organizations to apply for new TLDs, including multilingual ones. In that process, applicants will have to pay through the nose just to file an application, and then go through an arcane and treacherous challenge process to win anything. Whatever one thinks of that process, at least it was developed in an open, transparent way and everyone could comment on it. And while it was being developed, we all assumed that the same rules would apply to everyone. But the “ccTLD free gift” proposal short-circuits that process, in order to reinforce the already dominant position of incumbent national registries.
A bit of historical background is unavoidable here. Country code TLDs are a result of one of the worst — and one of the best — decisions that Jon Postel ever made. Postel was the USC computer scientist who single-handedly did what ICANN now does for the first 17 years of the Internet protocol's existence. Postel wanted all top level domains to be generic categories like .com and .org, but some European (whose political mentality apparently had not caught up with the Internet) insisted on having a TLD for his country. This proved to be a terrible idea, as it symbolically linked DNS assignments to national governments. That linkage started to come back and haunt the Internet in 1999 and we are still working out the consequences.
Postel's bad decision was to go along with that request to create country codes. His smart decision was to recognize the dangers of putting IANA in a position to decide who was or was not a country. So he found a standardized list that absolved him and the IANA of that decision. The ISO-3166 list, which has many things that are not national entities (like .IO for Indian Ocean), was at least an objective and neutral way to decide which territorial TLDs should exist.
The point is that there is but one DNS name space, not two. The distinction between ccTLDs and gTLDs is entirely political and arbitrary, not technical or economic. Since there is no IDN equivalent of an ISO-3166 list, the distinction between ccTLDs and gTLDs in the IDN space is even less sharp, one might say downright blurry. Indeed, in the early days of ICANN, cc's were thrown into the same policy making process as commercial registries, trademark owners and the like. ccTLD's broke off into their own supporting organization, due to the fact that ICANN had less contractual power over them and they needed to be persuaded, rather than forced, to join the regime. But as a matter of indisputable fact, ccTLDs are just registry operators and have the same basic economic interests as Afilias and VeriSign. Except that in many cases, e.g. China or Russia, they are closely connected to national governments.
On the whole, ICANN should strive to apply the same principles and standards to all applicants for new TLDs in the name space, whether they are ccTLDs or gTLDs. And so it's not clear why ccTLD's have a “right” to an extra IDN TLD at all. Does anyone believe that .com's owner should be handed a free gift of the “equivalent” of .com in another script? Should the registry for .org get a free gift of the equivalent of the term “organization” in Cyrillic or Chinese? What is the rationale for giving ccTLDs “fast-track” access to self-selected IDN strings and not gTLDs? I do not believe there is any public interest rationale, any technical rationale, any economic policy rationale. There is only a concession to the perceived political power of certain ccTLDs and governments.
But despite ICANN and the US Government's continuous stream of rhetoric about how “private sector led” and “bottom up” ICANN is, governments and incumbent country code registries have more clout than ordinary Internet businesses in ICANN. And a lot more clout than end users. So they have asserted the idea that they have some kind of special claim to new top level domains simply because they already have one that allegedly “represents” a nation. For a well thought out challenge to the link between sovereignty and country code names, see this great paper by Michael Froomkin.
I was originally sanguine about this process, thinking, “sure, give each ccTLD one new IDN string in a script of their choice and be done with it.” The govts/incumbents get their pound of flesh and that frees the rest of the world to proceed without interference.
But the international politics of names are too subtle and complex to be so easily contained. First, the countries decided that they couldn't possibly be satisfied with some abstract, two-character representation of their country name in a format that would be the same for everyone. Some countries contended that they couldn't possibly properly represent their country name with only two characters. Sounds fine, except that the beauty of the old ASCII country code list is precisely that it is a standardized coding. It is an essentially arbitrary mapping that obtains its correspondence and meaning through use, not through some divinely ordained correspondence to a country's “real” name. In that arbitrariness there was a complete equality and efficiency. Everyone knows that 2-letter TLDs are country codes. All country codes are roughly equal, each country gets one and no one is any better or worse than another.
Once you depart from that rough equality, then it's possible that some of these IDN scripts will be 3 or 4 characters, some will be 2, some may be 6. You are no longer dealing with “country codes” but with words, which means that they are in effect gTLDs. And it is only a short step from that — a step that many GACers and ccTLD managers are already making — to claim that they should have more than one, because they need to have “their” country name in multiple scripts. The European Union, for example, said that since its territory includes countries with Cyrillic and 3 other non-Latin scripts, it is legally barred from choosing only one IDN to accompany .eu. (Funny then, how was it legal to get .eu in the first place?) India, it turns out, has 24 different language groups that might represent its name differently. And of course, if one country gets 24 new IDN TLDs, won't they all want that many?
Given the fact that national governments have already demonstrated their tendency to claim all kinds of names related to their country, there is also the possibility that ccTLDs will lay claim to multiple words that refer to the country (e.g., the equivalent of “America,” USA, “United States” etc.)
At the end of the day, you get two tracks to a new IDN TLD:
On track one, you have incumbent ccTLD monopolies, who already control anywhere from 98% to 60% of the DNS registry market in their country. Those registries will be given, for free, first pick of two, three, or maybe 20 new IDN TLDs, and be able to implement them before anyone else, in a market that is characterized by extremely high switching costs.
On track two, you have nongovernmental competitors, who will have to wait a year or two extra, pay six-figure sums just to file an application, then another $200-300k to prepare their application and lobby for it at ICANN meetings, and then be subjected to months of challenges, review by “expert panels,” and possibly competitive auctions.
The free gift to ccTLD ideas needs to be carefully weighed to consider its implications for competition and diversity. I can't think of a better demonstration of the new international politics of ICANN in the post-WSIS period.