The internet governing body ICANN recently announced plans to open up the top level domain system, allowing individuals and companies alike to apply for their own top level domains (TLDs). This paves the way for potentially millions of new domain names from .hotels to .surfing to .whateveryouwant.

There are currently just 21 top level domains available, but with this new announcement, an infinite number of domains could be on the horizon. Brands such as Apple will be able to register .apple, and cities such as Auckland could register .auckland.

But will this have as big of an impact on the online sector as many are speculating? Is it really a big deal?

My initial thought was that this would increase the threat of cyber-squatting exponentially. Would this flood of new domain names force organisations to register all their brands and trademarks to prevent others from obtaining and exploiting them?

This is probably unlikely, as the new domains won’t come cheap. The Wall Street Journal reports that costs could lie anywhere between US$100,000 and $500,000. Also, ICANN will have to approve applications for domain names, and specific brand and company names will only be sold to their registered owners. This will at least provide some sort of quality control. ICANN is also deliberately keeping demand low by strictly limiting purchases to companies and entrepreneurs.

Even so, when this policy comes in to effect next year, generic names are bound to be in hot demand such as .airlines, .holidays, .deals and .jobs – which is likely to lead to some heated bidding wars. The main attraction is that once you purchase a TLD, you could then sell an infinite number of domains to go with it. For example, an entrepreneur could purchase .shoes and then sell any combination of domains from www.womens.shoes to www.sports.shoes to www.leather.shoes.

But how will users react to an influx of new TLDs? Will a specific TLD imply more credibility or authority for specific industries, or quite the opposite? Would you trust a .loans domain over a trusted brand? Or could these provide a means to distinguish actual finance or insurance companies from the phonies?

It will be interesting to see how the big brands respond. They may pass them up altogether, and TLDs could face a similar fate to .biz and .info which have progressively become associated with spammy, low quality sites.

The real value in this change will probably lie in the internationalisation of domains whereby non-English speakers, who account for the majority of internet users, will finally be able to use local language characters in their web addresses.

Which brings us to the search engines, how will they treat the new TLDs? How will language specific domains be treated? And with the more generic terms, how will geotargeting be inferred?

How will the search engines determine which TLDs contain sites of high quality? Will they apply more weight to certain TLDs as they do with .gov and .edu domains? Or will these new breeds struggle in the SERPs? Perhaps the clutter from all the new domains will result in an increase on the premium placed on the originals? Either way, search engines are likely to benefit to some degree as consumers will probably become more reliant on them to find certain sites amidst all the confusion.

It will be interesting to see how this all pans out, but somehow, I just don’t think it’s going to make too much of an impact. The final draft of this new policy is expected in early 2009. If it is approved, ICANN will begin accepting applications later that year.