From:           Web & Intranet Services Team, Economic Development Group, Ministry of Business, Innovation and Employment, Rachel Astruc
Received:     13 August 2012

We do not think the .nz domain name space should be opened at the second level for the following reasons.

Economic impact

Businesses will need to pay more to secure their IP across multiple second-level domain channels (at least double – possibly more). It potentially allows certain domain owners to become gatekeepers, inflating the price of some third level domains beneath them, or allowing detrimental-to-competitor names (brandxsux.computers.nz). The 2ld under the current system provides some information about the nature of the name owning organisation that will be lost with the change (for example it is not clear if “computers.nz” is an impartial official body or a partisan commercial organisation).

Businesses, particularly SMEs, are likely not to be well equipped to understand or manage second-level domain issues.

Businesses will not know (and neither will anyone else until roll-out) how many domains they will need to purchase, nor how much these will actually cost.

Businesses who fail to secure their IP may become victims of security fraud or wind up in a lengthy domain mediation process. There is not just an education process for NZ users, but the wider internet using community, who, familiar with our existing structure, may mistake a new 2ld as an official designation of some kind.

Security

The risk of spoofing and security issues rises without strong controls on second-level domains—for example, average users may be confused by someone who has taken on a second-level domain like bank.nz. Moderation of certain 2lds will mitigate this but not prevent it entirely … unless every variant is catered for, which is a nigh impossible task.

The risk increases that people will use crude/political domains to create controversy

Cybersquatting—a form of IP extortion—is already rife within the .nz webspace, and this can serve to encourage it.

Users

The usefulness of domain names has changed with the rise of search engines. Users are less likely to remember a domain, as they find information using Google or Bing. The proliferation of second-level domains can negatively impact search results. This may benefit Search Engine Optimisers (SEOs) but will again increase Total Cost of Ownership for domain name holders trying to avoid diluting their google juice.

Users will be at greater risk of believing in scams if they arrive at a second-level domain that seems trustworthy.

Internet Users without a vested interest will receive no improvement to their internet usage from the change

Feasibility

There is no measure of how widespread cybersquatting will be when this is rolled out, or how many staff the DNC will need to quickly resolve domain ownership issues.

Many “key” second-level domains will likely be questioned or ‘claimed’ by Government in an attempt to maintain brand security and to ensure users are directed to the same place. This may include second-level domains like tourism.

Other second-level domains (such as .bank, .security or .money) may need to be held to reduce risk of scams. There is no comprehensive list that includes these or the billions of variants that will no doubt be created to skirt moderation. What will require moderation is subject to change and is really a huge can of worms without any indication of governance at this time.

New Zealand has a low population that will not see significant benefit from extending to second-level domains—people who pay for these new domains will primarily be people attempting to protect their IP and cybersquatters. There are orders of magnitude more .com addresses than we have in the entire NZ namespace – we are not in any danger of running out, so why create the upheaval and inconvenience of changing an existing system?

The only groups that stand to gain from this process are:

Additional notes:

The introduction of the new gTLDs by ICANN means the future may hold a proliferation of domain namespaces that will all but render this discussion moot. But in the short-term, from our perspective opening the 2lds will be potentially painful for the majority of internet users with no real gain aside from commercial interests profiting from the disruption to existing norms, and the nebulous benefits of shifting brand names three characters closer to .nz.