500: ICANN’s Magic Number

For the most part, the only solid information about the New gTLD Program that has come directly from ICANN can be found in the Applicant Guidebook, a 350-page behemoth detailing the rigorous process future new gTLD owners will need to follow in order to apply. Unfortunately, the Guidebook is less than clear on some of the logistical aspects beyond filling out, submitting, defending and executing on a new gTLD application. As a result, some misinformation has been circulating among applicants and advisors. And as we’ve mentioned before, one of the goals of this blog is to dispel myths and rumors that arise about the New gTLD Program.

A recent subject of speculation has been how many applications ICANN will receive in its inaugural round, and the “magic number” that people seem to be getting caught up on is 500. Rumors range from the absurd to the fairly plausible. On the absurd end of the spectrum, some believe that ICANN has already received 500 applications. This is obviously ridiculous given the fact that the application period has not yet opened; it will open January 12, 2012 and run until April 12, 2012.

A slightly less ludicrous rumor is that ICANN will only allow up to 500 new gTLD applications to be filed in the first round. This is actually more of a misunderstanding than a myth. It is not the case that ICANN will only accept 500 applications, but that it will only process 500 applications at a time. In fact, there is no limit to the number of applications that can be submitted. Lately, we have heard that as many as 1,000 to 1,500 applications will likely be submitted, and up to two-thirds of those will be from strategic companies, such as businesses applying for .BRAND gTLDs.

Once the application period closes, all applications that pass an administrative completeness check will undergo an Initial Evaluation. This process will check two things: first, that applied-for gTLDs are not likely to cause security or stability problems in the domain name system, and that they are not confusingly similar to other existing or applied-for gTLDs; and second, that the new gTLD applicant has the requisite technical, operational and financial capabilities to operate a new gTLD registry.

ICANN has determined that it does not have the capacity to effectively process more than 500 applications at once. Therefore, if more than 500 applications are submitted, they will be processed in batches. The first batch will be limited to 500 applications, and subsequent batches will be limited to 400 applications.

Unfortunately, ICANN has not publicized much beyond this. In the Guidebook, it promises to “post updated process information and an established timeline” if batches are, in fact, necessary. The established timeline if it receives fewer than 500 applications is five months. Considering the fact that more applications will only increase the surplus of cash that ICANN will receive (way beyond the cost-recovery point for the New gTLD Program), we may find that ICANN will process more applications more quickly via outside agents such as Ernst & Young, who will validate applications and process them more quickly than ICANN could on its own.

When the ICANN Board officially approved the New gTLD Program on June 20, it was with the stipulation (written in the Guidebook) that the policy could continue to evolve. The reality is that we will probably see certain changes as we get closer to the application period. Keep checking back with gTLD Strategy for the latest updates and how they will impact your business.