INCEPTION IMPACT ASSESSMENT
Title of the initiative	REFIT Evaluation and Impact Assessment of Regulation EC 733/2002 establishing the “.eu” top-level domain (TLD) and Regulation EC 874/2004 laying down public policy rules concerning the implementation and functions of the .eu TLD
Lead DG – responsible unit – AP Number	DG CONNECT – Unit E.3, Next-Generation Internet	Date of roadmap	DD/MM/YYYY
Likely Type of initiative	SWD + Legislative proposal
Indicative Planning	Q4 2017
Additional Information	Insert link to "Commission decides" or to the specific website for the initiative
This Inception Impact Assessment aims to inform stakeholders about the Commission's work in order to allow them to provide feedback on the intended initiative and to participate effectively in future consultation activities. Stakeholders are in particular invited to provide views on the Commission's understanding of the problem and possible solutions and to make available any relevant information that they may have, including on possible impacts of the different options. The Inception Impact Assessment is provided for information purposes only and its content may change. This Inception Impact Assessment does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content.

A. Context, Problem definition and Subsidiarity Check

Context [max 10 lines]

The .eu top-level domain (TLD) was established by Regulation (EC) No 733/2002 of the European Parliament and of the Council of 22 April 2002 on the implementation of the .eu Top Level Domain. The .eu TLD was delegated by the Internet Corporation for Assigned Names and Numbers (ICANN) on 22 March 2005 and uploaded in the Internet root zone on 2 May 2005. It is governed by the implementing rules of Commission Regulation (EC) No 874/2004 of 28 April 2004 laying down public policy rules (PPR) concerning the implementation and functions of the .eu TLD and the principles governing registration.

This initiative is a Regulatory Fitness and Performance Programme (REFIT) review of the .eu Regulations, which has been included in the Commission's 2017 Work Programme, to ensure that the .eu legal framework still serves its intended purpose. It includes a "back-to-back" evaluation and impact assessment. In line with the Better Regulation guidelines, the evaluation will examine at least the 5 mandatory evaluation criteria of effectiveness, efficiency, relevance, coherence and EU added value. The evaluation will cover the implementation of the .eu legal framework across the European Union (EU), the European Economic Area (EEA) and candidate countries, since the adoption of the first Regulation in 2002. This evaluation will form a basis for eventual legislative and/or non-legislative initiatives. Both the backward-looking evaluation (to be accompanied by a Staff Working Document) and the future oriented Impact Assessment, outlining policy responses to identified challenges, will be very closely coordinated in terms of their timing and content with the possible adoption of concrete initiatives in 2017.

Problem the initiative aims to tackle [max 20 lines]

The possible problems identified at this stage are explained below. The list of issues might change, subject to the outcomes of the REFIT evaluation.

Market developments and a changing TLD system

Since the entry into force of the Regulations, the top-level domain (TLD) industry has undergone major changes. The Internet Corporation for Assigned Names and Numbers (ICANN) has introduced hundreds of new ‘generic’ top-level domains (gTLDs), while abolishing the rules requiring a strict separation between organisations managing domain names (registries) and those selling domain names to end-users (registrars). Yet the current rules do not allow the .eu TLD registry to sell .eu domain names directly to customers itself. This may hamper its ability to market its services effectively. In addition, people increasingly use mobile applications, search engines and social media to access online content, thereby reducing the visibility of domain names. The rapid growth in these technologies and user-trends puts pressure on the traditional domain names as well.

Outdated legal framework

Beyond that, the Regulations contain very detailed provisions, on such things as setting up a functional domain name registry and the process of reserving domain names for the European Union institutions, Member States and Candidate countries. These rules may not be relevant anymore or they may not be fit for purpose. The effects of cumbersome administrative constraints are impacting both the Commission and the registry when it comes to the day to day management of the .eu domain. In the medium term, such constraints may add up to the lack of flexibility to adapt to the challenges coming from the dynamic TLD ecosystem.

Ongoing changes in global Internet governance

The wider Internet governance model is undergoing changes as well. The transition of the Internet Assigned Numbers Authority (IANA) function from the US government to the multi-stakeholder community in 2016 was a milestone for Internet governance in that respect. The EU has committed itself to defend fundamental rights and democratic values by actively promoting and safeguarding a model of governance that enables the participation of all stakeholders, including the technical community, the private sector, civil society and governments, yet this is not reflected in the .eu TLD framework (or incorporated in the .eu TLD set objectives).

Overall

These aforementioned developments lead to questions about the relevance and suitability of existing rules, if and how they should be adapted to ensure the continued viability of the .eu TLD, and what role the .eu TLD Registry should play in the wider Internet governance community.

While direct attribution to the aforementioned changes has to be evaluated, the growth in .eu registrations has begun to flatten in the last two years. This may engender resource constraints that could imperil the capacity of the registry managing the .eu TLD to respond to increasingly complex quality requirements.

Subsidiarity check (and legal basis) [max 10 lines]

The legal basis is Art. 172 TFEU

The principle of subsidiarity is respected, since the .eu TLD which is the object of these Regulations, belongs to the European Union (it is its "country code" top-level domain or ccTLD) and hence has to be regulated at Union level. This does not affect how each Member State manages its own ccTLD (to which the .eu TLD is complementary). No Member State, either on its own or jointly, could provide this service.

B. Objectives and Policy options [max 20 lines]

TLDs are an integral part of the Internet infrastructure. They are an essential element of the global interoperability of the world wide web. Through a well-functioning .eu TLD, the Internal market should acquire higher visibility in the virtual market place based on the Internet. The .eu should provide a clearly identified link with the EU, the associated legal framework, and the European market place. It is intended to enable undertakings, organisations and natural persons within the Community to register in a specific domain which will make this link obvious. As such, the .eu TLD is a key building block for e-commerce in Europe and for strengthening the Digital Single Market, as well as for building a truly online European identity.

The overarching objective of the initiative is to better enable the .eu TLD to achieve its aforementioned intended mission. Therefore, the initiative will assess which elements are no longer fit for purpose via a REFIT evaluation (backward-looking exercise) and identify possible policy options for the modernisation of the .eu regulatory framework via the impact assessment (forward-looking exercise). The impact assessment and the ongoing REFIT evaluation will be closely coordinated in terms of timing and contents.

Further to the aforementioned overarching objective, the initiative will assess the need to update the mission of the .eu TLD to better promote European values and reflect EU priorities in the domain-name system (DNS) environment (e.g. consumer protection, multilingualism, respect of users' privacy and security), in light of ongoing changes in global arrangements affecting governance of the technical resources and functions of the Internet.

The policy options and relevant instruments will be defined in detail at a later stage to take account of the results of the evaluation and the results of the public consultation. Examples of specific objectives for which future options may be developed are:

facilitate operational management (e.g. the introduction of a much easier process for reserving .eu domain names for the European Institutions and Member/Candidate Countries, easier contracting);

update the Regulations in view of changed market circumstances. That might entail the introduction of a possibility for the Registry to sell directly to registrants;

ensure the rules are future-proof, and allow the .eu TLD registry to introduce new services, if appropriate, that complement the management of the .eu TLD and its variants (without having to amend the Regulations each time to do so);

promote EU priorities in Internet Governance, possibly by including provisions which would explicitly orient the .eu Registry's activities to that direction;

enhance the use of .eu as an online European identity. This might include among others consideration on changing the eligibility criteria for registrants.

C. Preliminary Assessment of Expected Impacts [max 20 lines]

Likely economic impacts

The review of the Regulations will directly affect the .eu TLD management. In this respect the policy options to be defined are expected to ease the operational management of the .eu TLD and improve the capacity of the .eu registry to flexibly respond to changes in the top-level domain name industry.

If the option to allow vertical integration were to be pursued, registrars, particularly those acting as registries, might be faced with more competition. A key issue that will be analysed is whether there is a risk that the companies that operate on the competitive level of the market would be foreclosed by the integrated entity, and how to mitigate those concerns.

It will also be verified whether the registrants (citizens and undertakings) are likely to benefit (or not) from each of the options, including from the option allowing vertical integration.

The association of the domain name with the EU internal market has impacts on e-commerce both with regard to consumers' choice and with regard to reaching out to bigger markets for companies/SMEs.

Likely social impacts

The .eu TLD is intended to promote the use of, and access to, the Internet networks. It can accelerate the benefits of the information society in Europe as a whole and play a role in combating the risk of digital divide (e.g. by boosting domain name registrations is areas which are suffering from poor domain name penetration because of the scarce local Internet providers' actions and promotions – the digital literacy could this way be improved and eventually such actions could be seen as best practises for other regions).It can also constitute an emblematic symbol for the EU in the digital world that will support social/EU integration.

Likely environmental impacts

No environmental impacts are expected.

Likely impacts on fundamental rights

No impacts are expected on fundamental rights.

Likely impacts on simplification and/or administrative burden

The initiative aims at removing unnecessary administrative burden that would significantly ease the management of the .eu TLD both at Commission and at registry level and will thus help the .eu TLD deliver better services to citizens and undertakings in the most efficient manner.

D. Data Collection and Better Regulation Instruments

Impact assessment

An impact assessment will be prepared to support the preparation of this initiative and to inform the Commission's decision.

Data collection [max 10 lines]

Existing data

Biannual Report from the European Commission to the European Parliament and the Council on the implementation, functioning and effectiveness of the .eu Top-Level Domain, 18.12.2015 COM(2015) 680 final

EURid's annual report and quarterly reports on .eu status and progress

CENTR stats on fundamentals on market registrations, growth trends, ccTLD & gTLD domain counts/growth, renewal/creation rates, pricing, zone age, DNSSEC, IDNS, geo-distribution of domains, market share by country stats and breakdown of TLDs in individual countries

EURid studies on certain matters like vertical integration and review of market changes

Data gathering

In the context of the REFIT, evidence will be gathered through stakeholder consultations (see below).

Consultation strategy [max 10 lines]

The consultation strategy covers both the evaluation and the Impact Assessment stages. The consultation strategy aims to prepare the evaluation and give an additional insight into the application of the TLD. The consultation activities will help define the problems to address and test ideas for the reform. The consultation strategy will also help to develop a policy response for the digital age by targeting a wide range of stakeholders. Those include the current .eu registry, other ccTLDs and gTLDs registries, registrars, registrants and public authorities supervising the implementation of ccTLDs.

Public consultation

An open public consultation will be launched in May 2017.

The launch of stakeholder consultations related to this initiative will be announced in the consultation planning that can be found at http://ec.europa.eu/yourvoice/consultations/docs/planned-consultations_en.pdf.

Other information gathering activities

Consultations on the initiative also include targeted workshops and direct engagement with stakeholders, outreach to ICANN, cooperation with other Commission DGs and Agencies, Europol, online evidence gathering activities in collaboration with CENTR.

Will an Implementation plan be established? [max 5 lines]

No. The review is not expected to lead to transposition or implementation work to be done by the Member States.