ICANN’s New Top-Level Web Domains Could Spell Dot-Trouble For Businesses

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Do you have $185,000 lying around? If so you can apply to purchase one of the web’s new addresses via the Internet Corporation for Assigned Names and Numbers (ICANN), which runs the web’s domain-name system. The new generic top-level domains (gTLD), could be anything from .music to .baseball to .time. ICANN says it’s responding to a lack of supply for new domains, but critics charge the process amounts to a boondoggle for web registrars and could increase costs for companies that may feel the need to buy new addresses to protect their brands. At least one high-ranking U.S. official has warned of “a potential disaster” if the program proceeds as planned.

Just look what happened when ICANN released the .xxx top-level domain suffix last year. Since then, many organizations have felt compelled to buy up .xxx domains in order to prevent cyber-squatters or other trouble-makers from beating them to the punch. For example, Central Michigan University has purchased cmich.xxx, cmuchippewas.xxx, thisiscentral.xxx and is waiting on approval of CentralMichiganUniversity.xxx. “The reasoning for the purchase is to protect the university from inappropriate use of its name,” CMU PR director Steve Smith told a campus news organization this week, adding that the purchases will keep adult content out of CMU-related web search results. Those domains cost $1,299.90 per 10-year license for a total of $5,200.

(MORE: Want a Custom Domain Suffix? Prepare to Shell Out at Least $185,000)

With new gTLDs costing $185,000 over 10 years — plus a $10,000 per year fee — the cost to companies and organizations could be extreme. On the other hand, domain registrars like GoDaddy and Verisign could see a windfall from the new program, as Bloomberg reported recently.

Several important groups have expressed concern over the new domain system, not to mention the Federal Trade Commission and the U.S. Dept. of Commerce. But the U.S. government has little power over ICANN, which is an independent, global non-profit group that was founded in 1998 to administer the domain system. Prior to that, the U.S. government ran it. Today, ICANN administers the 22 gTLDs, including familiar ones like .com, .net, and .org.

Last month, Jon Leibowitz, FTC chairman testified before Congress that the new domain system as proposed would be “a potential disaster.” In a letter to ICANN, Leibowitz elaborated:

A rapid, exponential expansion of gTLDs has the potential to magnify both the abuse of the domain name system and the corresponding challenges we encounter in tracking down Internet fraudsters. In particular, the proliferation of existing scams, such as phishing, is likely to become a serious challenge given the infinite opportunities that scam artists will now have at their fingertips.  Fraudsters will be able to register misspellings of businesses, including financial institutions, in each of the new gTLDs, create copycat websites, and obtain sensitive consumer data with relative ease before shutting down the site and launching a new one.  The potential for consumer confusion in other variations of these types of scams is significant.  As an example, “ABC bank” could be registered in .com, but another entity could register “ABC” in a new .bank gTLD, and a different entity could register “ABC” in a new .finance gTLD.  Scam artists could easily take advantage of this potential for confusion to defraud consumers.

Lawrence Strickling, assistant secretary for communications and information and administrator of the National Telecommunications and Information Administration, which is part of the Dept. of Commerce, also expressed reservations, writing that “there is tremendous concern about the specifics of the program that may lead to a number of unintended and unforeseen consequences and could jeopardize its success.”

(MORE: FTC to ICANN: New Domain Suffixes Will ‘Undermine’ the Internet)

Many groups and other interested parties have called on ICANN to slow down the process and consider the possible negative consequences of the new system. ICANN, which has a reputation for lack of transparency, insists it will take into account the concerns of critics. On Wednesday, the group told Reuters that it would review Strickling’s recommendations. “We appreciate Assistant Secretary Strickling’s comments and suggestions,” Steve Crocker, chairman of ICANN’s board, told the wire service.

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