The decision by the the US-based non-profit body that runs the domain name system to reject proposals for .xxx could have wide-reaching repercussions for how the internet is run, writes internet law professor Michael Geist.
In the 1980s, seven generic top-level domains, including .com, .net, and .org, were established. Those domains remain among the most popular on the internet, with millions of registrations worldwide.
Sex is big business on the internet
Since its inception in 1998, the introduction of new generic top-level domains has emerged as one of thorniest policy issues facing the Internet Corporation for Assigned Names and Numbers (Icann), with the governance body approving seven new domains, including .biz and .info, in 2000.
Interest in the creation of yet additional domain name extensions remains high as the domain name registry business presents a lucrative opportunity to collect annual registration fees for potentially millions of new domain names.
Moreover, domain name registrars support additional domains as they provide new products to market to the internet community.
Icann's initial reluctance to establish dozens or hundreds of new top-level domains initially centered on fears that an influx of new domain name extensions might adversely impact the reliability of the internet.
Those technical concerns are rarely voiced today.
Similarly, the intellectual property community opposed new domains on the grounds that they might encourage domain name speculation known as cyber-squatting.
That issue has been largely addressed through "sponsored" domain extensions that restrict access to the new domains, as well as through advance registration systems that grant trademark holders the right to register the domain name equivalent of their trademarks before the general public.
With millions of dollars at stake, the net community has relied on Icann to establish a transparent system for creating new domain name extensions.
The resulting process has left many observers unhappy. They argue that it is too expensive as application costs alone are now estimated at $250,000.
They say it is also too cumbersome with the creation of the domain name extension requiring months of negotiation after preliminary approval is granted and too subjective as decisions are fraught with policy choices.
In March 2004, ICM Registry, a US company, joined forces with a Canadian-based organization called the International Foundation for Online Responsibility, to propose the creation of a new .xxx top-level domain. The proposal maintained that .xxx would "clearly and unequivocally convey to the internet user that the site contains adult material of a sexual nature".
Fifteen months later, Icann announced that it had entered into commercial and technical negotiations to establish the .xxx domain.
The decision came as a surprise since there were many other worthy domain name proposals awaiting approval and this particular domain was sure to generate controversy.
Indeed, the prospect of a .xxx domain name extension created an immediate firestorm in the US.
According to US government documents released last week under a Freedom of Information Act request, officials quickly recognised the sensitivity associated with the new extension and considered whether it could influence the process.
Those concerns grew as several groups actively opposed the new domain extension with letter writing campaigns that generated thousands of critical letters and e-mails.
Faced with a brewing domestic political issue, the US government urged Icann to delay final approval to allow for an extensive global consultation. In the months that followed, several other countries voiced opposition to the new domain extension.
The Icann board raised several concerns with the .xxx backers, who repeatedly adjusted their proposal in response.
Despite the changes, a divided Icann board ultimately voted nine to five against the establishment of the .xxx domain. The decision predictably elicited criticism from several quarters.
Many Icann watchers noted that the function of the organisation was to address technical internet issues in an independent manner.
However, this decision appeared to be based on political considerations with near-obvious intervention from the US government.
The European Union echoed those concerns. A spokesperson characterised the episode as a "clear case of political interference in Icann" and lamented that "it is a worrying development that the U.S. administration has interfered in this process".
In caving to US pressure, Icann may have traded short-term gain for long-term pain.
In the short-term, Icann has staved off immediate government pressure and has likely ensured continuing support from the US government. In fact, late last week the US government announced that it planned to renew one of its Icann agreements for an additional five years.
Looking ahead, however, proponents of a multi-lateral internet governance framework will cite this case as a classic illustration of why the Icann approach must be altered to ensure transparency, independence, and to better reflect the needs of the global community.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law.