A UN style veto in Internet Governance?

After a temporary pacification due to the first meeting of the Internet Governance Forum last November, the debate is heating up again on a slippery issue in Internet Governance: "public policy" limits to the creation of new Top-level domain names or TLDs (to supplement existing .com, .info etc.). The latest policy proposal lists a few "selection criteria", among which that: "Strings should not be contrary to public policy (as set out in advice from the Governmental Advisory Committee)". The position of such Advisory Committee is that to address public policy concerns, any of its members (i.e. any government) would have a virtual veto power over TLD applications. Civil society groups have already mobilised against this.
I have two quick comments.
The first is that, until now, only very few TLDs have been created (except those representing countries) and they have not been particularly succesful with customers, who continue to register their websites under .com and/or their national TLD. I am thus wondering whether an additional restriction is likely to have any significant impact on this situation in practice. Moreover, a controversial TLD such as .xxx has already been vetoed by governments without any provision on public policy being in place. Yet, I agree that codifying a principle by virtue of which any government would be able to impose a world-wide veto (albeit only on TLD strings) is a rather scary perspective.
My second thought has to do with my old fixation for introducing more competition in the Domain Name System (DNS). More competition is beneficial for consumers and innovation, but it would help also in the case at hand. With more competing private sector operators and ICANN restricted to a technical role, it would become more difficult to impose such world-wide bans. Of course, any State would remain capable of blocking at its borders anything it does not like, but at least it will not be able to impose it on the whole of the Internet.