The issue that is being discussed is how to handle the situation of multiple people applying for the same TLD, and they cannot come to an agreement amongst themselves.
I have to say it's a wee bit dismaying that the new gTLD process isn't close to starting, and ICANN's already painted themselves into a corner. On the one hand, there's no question that ICANN wasn't able to run the beauty contests successfully, but auctions are virtually guaranteed to leave all the high profile domains parked with domain speculators. The experience of .MOBI is instructive here. (As you may recall, Vittorio and I are on the .MOBI policy advisory board, and I'm the ALAC designee, so you can consider this an interim report.) They've tried a bunch of different approaches to distributing domain names. They auctioned off some "premium" names, and they've done an RFP for others, somewhat like the beauty contest except that the registry picked the names, not the applicants. The auctions were a financial success, but a failure for domain users. Most auctioned names are just parked with ad sites, a lot of which don't even work properly on mobile phones, so we can see that speculators routinely outbid real applicants with plans for the names. See, for example, flowers.mobi which got $200K but is just parked on a site with impressively cruddy HTML, or fun.mobi which cost $10K and is also parked on a mobile-hostile site. Given the pervasive culture of speculation in the domain registration business, I see no reason to expect ICANN auctions to produce any other result. There haven't been many .MOBI RFP's, but the few they've done seem to have worked, most notably weather.mobi which is run by the Weather Channel and provides actual weather information. I don't know the details of their agreement with mTLD, but my impression is that rather than charging a lot, .MOBI got acontractual promise to build a useful weather site. I do think a key reason this can work is that they picked names and topics whose meaning is straightforward, making it a lot easier to evaluate proposals, and I'd expect the same process could work for TLDs. With respect to all the money that auctions can bring in, .MOBI has spent a lot on tools for building mobile web sites, e.g., the dev.mobi device atlas which lists the characteristics of all the browsers on all the models of phones available so that sites can customize themselves to the device on which they're displayed. (Mobile web sites are a lot like PC web sites a decade ago.) That's fine for .MOBI, where mobile web sites are a major part of what they are, but I don't see anything analogous for ICANN. In particular, I have grave reservations about the suggestion that ICANN should engage in yet more mission creep with an even larger budget and use the auction proceeds to fund virtuous causes. Given ICANN's great difficulty in managing itself, and its inability to deal with all of the virtuous TLD applications since 2000 (how come they rejected .MAIL but approved .ASIA?) I cannot see any reason to expect other than yet another bureaucratic mess. If ICANN's going to get lots of extra revenue from auctions, they should remember what business they're in and use it to reduce the 25 cent domain tax. R's, John