Just to Clarify

FairWinds Partners —  September 21, 2012

If you’re a new gTLD applicant, there is a chance that at some point over the past few weeks, you received a notice from ICANN informing you that your application had been selected to be part of a Clarifying Questions Pilot program. In an August 9 webinar, ICANN pointed out that although the questions that select applicants receive as part of the Pilot are actual questions based on the evaluators’ review of the application in question, the answers that applicants send in will not be counted toward the ultimate evaluation of their applications. Rather, this Pilot program is designed to help ICANN ensure that it gets the Clarifying Question (CQ) process right by asking the right questions to elicit the proper responses from applicants.

What ICANN also mentioned during the August 9 webinar was that at least 90 percent of all new gTLD applicants will receive at least one CQ when the official questions are posed later this fall and winter. The majority of these questions will focus on the financial portion of the new gTLD application responses, in particular the Letter of Credit that many applicants submitted as proof of a Continued Operations Instrument (the stop-gap measure ICANN designed to continue registry operations in the event that a new gTLD operator goes belly-up).

Specifically, we’ve received indications that the CQs regarding the Letters of Credit will likely request an amendment that provides ICANN with unconditional entitlement to the funds named therein. While this may present a logistical headache to some applicants, especially those representing major corporations, in the grand scheme of things, having to tweak their Letters of Credit is the least of applicants’ worries.

Having worked with dozens of new gTLD applicants, a handful of our clients were selected to participate in the CQ Pilot program. Those clients that were selected generally only received a very limited number of questions (one to two) that focused on their Letters of Credit. But many other companies with whom we are in contact have let us know that they received many more than one or two questions, about various aspects of their financial responses as well as other parts of their applications.

Hearing this feedback raised some serious red flags for us. While the New gTLD Program is, in many ways, a brand new process, from our experience working with ICANN on past gTLD launches, receiving multiple requests for clarity or additional information from ICANN is not a very good sign. In fact, it could signal some major issues with the application itself. If applicants do not successfully answer ICANN’s CQs in a way that satisfies the new gTLD evaluators, there is a good chance that their applications will end up in Extended Evaluation. At best, this will delay the launch of their gTLDs; at worst, it could result in the application failing completely.

As mentioned, the real CQs will not be issued for some time yet – when exactly still remains to be seen. But in the meantime, it will be advisable for applicants to begin discussing their likelihood of receiving multiple CQs and their subsequent options with their application services providers. And if any applicants feel less than confident in the way their applications were prepared, now is the time to seek out a new partner to help navigate the potential pitfalls of this next phase of gTLD evaluation.