Top-level domains may pose serious costs to franchise businesses

Aside

A recent story in The Wall Street Journal, “The Race to Nab Web Addresses” highlights the potentially lucrative opportunities many entrepreneurs believe exists in securing top-level domain names when they become available for the first time in years on Jan. 12. While there may be opportunities for some, there are significant costs and ramifications for franchise businesses. 

The non-profit organizations that manages the internet domain-name process, Internet Corporation for Assigned Names and Numbers (ICANN), decided to move ahead with its plans to expand the number of generic top-level domains, despite the opposition of the IFA and many other business groups across the globe.

ICANN will open the application window for new top-level domains as planned on January 12. The top-level domain names appear to the right of the “dot” in internet addresses, for instance the .com or .gov. ICANN’s decision to move forward will likely create thousands of new top-level domain names compared to the twenty-two in use today.

The Department of Commerce on January 3rd wrote to ICANN citing “tremendous concerns’ by industry leaders about the “unintended and unforeseen consequences” of expanding the list so dramatically, and asked for time to better educate business and consumers about the application process and its possible negative effects.

IFA, as members of the Coalition for Responsible Internet Domain Oversight, joined over 160 business groups in urging Congress and the Department of Commerce to intervene and move the program’s start date. As part of the coalition, IFA met with the Commerce Department and congressional leaders to relay the effects the new process will have on its members, potentially costing millions of dollars as they are forced to register multiple new domains to protect their trademarks and brands. IFA joined these groups to petition the Commerce Department to postpone the opening of the top-level domain application window unless or until such time as ICANN convincingly demonstrates that unlimited TLD name expansion would:

  • Promote consumer trust;
  • Enhance Internet security;
  • Promote widespread economic benefits across diverse economic sectors and stakeholders; and
  • Demonstrate that these benefits will exceed the costs that such gTLD expansion would inevitably impose on the global Internet community.

The initial fee for one new top-level domain is $185,000 not including internal costs. The process to register for a new domain name will close on March 29, 2012 and ICANN is not set to release the approved top-level domains until 2013.

For more information concerning ICANN and top-level domain names please contact Jay Perron, JPerron@Franchise.org.

Posted by Jay Perron, IFA Vice President for Government Relations & Public Policy

House Subcommittee Rips ICANN Domain Name Program, Calls for Delay

Aside

Last week, the House Energy and Commerce Subcommittee on Communications and Technology reviewed, and universally criticized, a proposed program by a government-sponsored non-profit, the Internet Corporation for Assigned Names and Numbers (ICANN) that would accept applications to expand the existing set of internet top-level domain (TLD) names.

At present, websites only use one of a handful of TLDs, such as the familiar .com, .org, .edu and .gov extensions.  The proposed new program would offer the opportunity for companies and individuals to register, name, and operate their own TLDs for an initial fee of $185,000 and an annual maintenance fee of $25,000. 

Opponents of ICANN’s proposal also point to the potential for “cyber-squatting” under the new web domain system.  Companies and brand managers would have to spend enormous sums of money to defensively register a potentially-unlimited number of TLDs.  The potential for trademark abuse and fraud was pointed out by many, including both Subcommittee Chairman Greg Walden (R-OR) and Ranking Member Anna Eshoo (D-CA).  Nearly all the lawmakers on the subcommittee, both Republicans and Democrats, called for the program to be delayed.

ICANN’s Senior Vice President Kurt Pritz struggled to justify the $185,000 registration fee, while Daniel Jaffe of the Association of National Advertisers testified that the program would force businesses to choose between massive cost increases and damage to their reputation by cyber-squatters.  Jaffe leads the Coalition for Responsible Internet Domain Oversight (CRIDO), of which IFA is a member.  Individual franchises rely on the continued strength of world-class brands that help give franchises a higher success rate than other small businesses.

According to ICANN’s own studies, Mr. Jaffe said, the cost of the proposal would “force companies to reduce capital investment and convert billions of dollars worth of resources from job creation and product development”.

In an economic climate where businesses continue to deal with uncertainty and job-killing government regulation, it is evident that ICANN’s top-level domain expansion would create an enormous and unnecessary burden for all businesses and for franchise businesses in particular.

Click here for more information about ICANN and its impact on franchise businesses.