New gTLDs: ICANN suggests auctions as final troubleshooter

Following the announcement of the introduction of new generic top-level domains (gTLDs), the board of the Internet Corporation for Assigned Names and Numbers(ICANN) has proposed the introduction of an auction system to deal with demands for similar or identical top-level extensions. 
On June 26 2008 ICANN approved a recommendation that will significantly expand the possibilities for new gTLDs (for further details please see “Historic expansion in gTLDs approved”). Since the announcement, ICANN has considered ways to implement the process, potential procedures and regulations in support of the launch.
ICANN stated that auctions sustain allocative efficiency by putting scarce resources into the hands of those who value them the most. In a report, ICANN mentioned the following reasons in support of its choice for an auction system:
  • Applicants whose true intentions or abilities are to serve many users would be able to justify higher bids than applicants who will serve few users;
  • Applicants capable of providing high-quality service at low cost would be able to justify higher bids than applicants providing low-quality, high-cost service; and
  • Applicants who intend to develop the gTLD immediately would be able to justify higher bids than applicants whose purpose is to hold the gTLD, unused, for speculative purposes.
ICANN also indicated that it intends to use auctions in the new gTLD process as a tie-breaking mechanism, and not as the primary allocation mechanism. As such, auctions would be the final means of settling conflicts that have not been resolved at any of the previous stages in the process.
Users were able to submit comments and views on ICANN's proposal until September 7 2008. 
David Taylor, Lovells LLP, Paris

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