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BW has an article on the ICM Registry's battle with ICANN and the lawsuit ICM filed against the US Commerce Department:

Quote:At the heart of the .xxx domain row is whether the U.S. exerts undue ideological influence over how the global Internet is governed.

None of ICANN's ruling-committee members cited pressure from conservative groups or the Commerce Dept. as a reason for voting against the .xxx domain. But ICM Registry begs to differ and says a decision made on ideological grounds is illegitimate. "Commerce has been treating ICANN, an independent nonprofit, like a government agency without the authority to do so," says Stuart Lawley, Chairman and President of ICM Registry.

PROTEST LETTERS.  ICM Registry isn't alone in that view. Members of the international community believe that ICANN should answer to an international body like the U.N., rather than to a U.S. government agency. The .xxx debate, they say, is an example of how the U.S. is mishandling its charge by letting domestic politics interfere with the Internet...

full article: http://www.businessweek.com/technology/c...978121.htm

The latest update:

Quote:Eight months after the Internet Corporation for Assigned Names and Numbers (ICANN) declined to approve a proposed contract with registrar-hopeful ICM Registry, controversial sponsored Top-Level Domain dot-xxx is back.

Late Friday, ICANN posted a revised contract on its website, and this time, ICM Chairman and President Stuart Lawley thinks the deal will go through—possibly allowing open registration of domains as early as this summer.

“The application was never rejected,” Lawley told AVNOnline.com on Friday. “ICANN was just concerned about some of the policies [that were alluded to but never spelled out in the previous contract]. They’re there in black and white now.”...

full article: http://www.freespeechcoalition.com/FSCVi...?coid=1025

The full announcement from ICANN:
http://www.icann.org/announcements/annou...5jan07.htm

A related commentary:

Quote:The idea of a ".xxx" web suffix for porn sites is the internet's vampire: it seems nothing can kill it. Censors often oppose it because they believe anything that can be construed as legitimisation of pornography will hinder their efforts against it. Civil libertarians oppose it on grounds such as the threat of it being used to marginalise a wide range of material having to do with sexuality. Adult webmasters widely view it with suspicion, as anyone who has a ghettoisation scheme to "help" them usually isn't doing them a favour.

Article continues
In fact, it is very difficult to find any lobbying group in favour of .xxx, with one notable exception. Namely, a company called ICM Registry, which would hand out .xxx site registrations, and would be given a money-making machine. The .xxx vampire has risen again because Icann, the organisation in charge of top-level domains, recently revisited the question of whether it should approve it as a "Voluntary Adult Top-Level Domain"...

full article: http://technology.guardian.co.uk/weekly/...92,00.html

Update...again:

Quote:Online pornographers and religious groups are in a rare alliance as a key Internet oversight agency nears a decision on creating a virtual red-light district through a ".xxx" Internet address. The Internet Corporation for Assigned Names and Numbers, which has already rejected similar proposals twice since 2000, planned to vote as early as next week on whether to approve the domain name for voluntary use by porn sites.

The decision ultimately could hinge on whether ".xxx" has the support of the adult-entertainment industry - and many porn sites have been strongly opposed.

"One of the criteria is that it (must) have general support among the industry it's supposed to serve, and it does not,"...

full article: http://hosted.ap.org/dynamic/stories/I/I...SITE=FLPET

Update:

Quote:There will be no new .xxx suffix to designate adult-themed Internet sites, ruled ICANN, the organization responsible for oversight of domain names. Although this marks the third time ICANN has rejected a .xxx proposal, its proponents are not likely to drop the issue. A court battle may lie ahead...

Policing content is against ICANN's mandate, and that was the chief rationale the board offered for its decision...

"Realistically, though, I think it was political pressure related to the adult content," Nemer said. "Basically, a .xxx domain name would set up a red light district online, which is something a lot of people wouldn't like."...

full article: http://www.ecommercetimes.com/story/CY2l...main.xhtml

Quote:The decision ultimately could hinge on whether ".xxx" has the support of the adult-entertainment industry

It's never had adult industry support.

Quote:None of ICANN's ruling-committee members cited pressure from conservative groups or the Commerce Dept. as a reason for voting against the .xxx domain. But ICM Registry begs to differ and says a decision made on ideological grounds is illegitimate

What ideological grounds/pressure is ICANN bowing down to by rejecting .xxx?  Conservative groups and the porn industry are both against .xxx. The ICM Registry is the only organization pushing for this TLD.  ICM's only ideology is $$$$$$$.