Tag: Nominet

Members of the UK’s domain registry, Nominet, have called an EGM to get rid of most of the governing board. After fighting tooth and nail, chairman
Russell Haworth resigned yesterday (Sunday), but other controversial board members remain.

Unusually for me, this year’s report will be updated live. But you’ll have to refresh your browser manually!

Note that this is paraphrased!

The argument is over the direction of Nominet. When it was founded, the idea was for it to take over from the Naming Committee and run the UK’s top level DNS servers. The Naming Committee was overwhelmed, and it was felt reasonable that a new organisation could take over the work, funded by a small fee for new registrations.

This was inevitably going to lead to a surplus income, which was supposed to be distributed for the public benefit, keeping reasonable reserves in case of major court cases.

In 2006 Nominet altered it’s remit to allow other activities, which I warned about at the time. It turns out I was right (as usual), and in the intervening years the board diversified into such things as self-driving cars and subsidising a cyber-security business, in competition with some of the members who were paying for it. Network Solutions all over again.

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Mark Wood opens, and acknowledges that the board hasn’t been listening to members. Grateful to Russell Howarth for driving growth.

Invited Simon Blackler to speak for a few minutes. Mark Wood says he declined.

Now going to member’s questions, starting with those sent in advance.

Question: Why has the board predicted chaos if the board changes?

James Bladel: It will, indeed, fall apart without the experience of the existing board. As the board has prevented the second motion to appoint a new board, it will delay reforms.

Question: The campaign by the board has been dirty. How will you heal the rift.

Rob Binns: “We will continue an open dialogue” and make sure there is a meaningful two-way dialogue.

Question: Ester. Why was second resolution (Appoint new directors) blocked?

James Bladel: Don’t ask me – ask Roy. But we have established processes, so we’re not going to make an exception just because the members vote to have one.

Question: What are the chances of the government stepping in and resulting in a price rise?

Steven Page: There is a possibility, but we don’t know for sure. “Nominet is at the heart of digital Britain”. Sounds to me like a FUD pitch.

He’s just suggested the NHS might collapse if the board is removed, as Nominet is critical infrastructure.

Question: Why were Registry Advisory Council idea underway before the EGM?

Ellie: We wanted to find another way to get feedback. She described it as a “registry business”.

Question: What are the board’s future plans depending on whether the resolution passes or not?

Rob Binns: “As a board we will lay out a process that will drive that engagement” regardless of the outcome.

If the motion passes (board half fired) we will have a focus on stability.

Questions: What justifies huge increases in board remuneration.

Mark Wood: Our strategy was to diversify into alternative revenue streams as a hedge against possible income decline. Stated that costs would increase (but didn’t explain why).

Jane Tozer: We take the pay issue seriously, so we’ve frozen it. Our executive team has outperformed on its targets. Appears to be reading a written statement. It benchmarks pay against similar sized technology companies. (Odd, as these are profit driven – Nominet is supposed to be running a DNS).

Question: What is the cross-subsidy between domains and cybersecurity?

Ellie: We’re not cross-subsidising.

Question: One of the problem is lack of engagement. Would the board introduce members meetings?

Anne Taylor: As a board want to export all ways of engaging. It was a bad move to shut down the forum.

David Thornton: Shutting down the forum was inflammatory but needed a re-vamp.

Question about discounts for .co.uk and .uk together. Irrelevent.

Question: Why has it taken so long to realise members are not happy?

Mark Wood: We’ve missed some signals. Simon Blackler has run a good campaign and raised a lot of issues. We want to make these changes and accelerate them.

Question: Will be bring back member engagement lunches.

Ellie: Yes, stuff like that. “We’re going to need to find more ways to get the views of the network”.

Question: Why can’t we hear from Simon Blackler?

Mark Wood: It’s not a debate; it’s a company EGM. Simon Blackler declined to speak.

Question: Has the current board makeup been complicit in side-lining members’ decent?

James Bladel: I don’t think this has really happened as we have vigorous debates on the board.

Question: What’s Russell’s status right now?

Mark Wood: Russell actually stood down from the board on Sunday. (Subsequently confirmed that the registration was accepted).

Question: About CNI status.

Stephen Page: We’re not, but we’re looking at what would happen if were were designated as such. It could push up our costs. It depends which part of the regulatory system takes us on. We hope it won’t increase prices.

Question: If the broad is critical, what is the plan if anything happened to it?

Rob Binns: Yes, we have a contingency plan. The motion is to remove various members of the board. We’d have to think about how we’d manage that. In any scenario we’ll continue with improved engagement. Didn’t explain what the plan was.

Question: Similar to previous on member engagement.

Mark Wood: Repetitive waffle. Sounds like they’re talking out more difficult advance questions.
James: Bladel: More repetitive waffle. Absolutely nothing that hasn’t been said before. “We need to focus on the future.” “Rebuild relationship”.

Mark Wood: Largest turnout in Nominet’s history. As the whole board has said, Nominet will change as a result of this. I believe it will be easier if we don’t change the board. Closing the member forum was a mistake. We’ll find new and better ways.

We also need to bring the government into management of Nominet as a stakeholder. Nominet delivers brilliant service, does an important job, and does very well.

Nominet, the not-for-profit company that manages most of the .uk domain space, has been worrying me of late. It replaced a naming committee in 1996 as the volunteers that run it started to become overwhelmed by the workload, and was set up be self-sustaining by charging for domain name registrations. Based in Oxford, it now employs 140 people.

They’re worried. Anyone who wants a domain name pretty much has it – or it’s being sat on by a cybersquatter. Either way, Nominet’s getting the residual income from having registered it in the first place, and this is now fixed. Or worse, as the enthusiasm for registering names in the hope of making money from it later wanes, their income may fall as people unload their speculative “investments”.

As well as Nominet employees no longer being kept in the manner to which they’re accustomed, this presents a problem for those dealing in domain names commercially. Call them cybersquatters, domainers or parasites as you wish – domain dealers are making money out of buying and selling domain names. Their portfolio losing value as the bubble bursts could be problematic for them. With new top-level-domains now available, and the importance of a particular domain name falling, this is inevitable.

So, unsurprisingly, Nominet has been talking about expanding in other ways. At today’s AGM, new CEO Russel Harworth, was taking about expanding in to adjacent markets. What could this mean? As well as providing domain names, the obvious answer is hosting or other Internet services. Nominet members are going to have a problem with that: Nominet has a monopoly position issuing domain names, a big pile of cash and no way would it be good for anyone if they started competing with UK Internet businesses.

I pushed Russell Haworth on his choice of words. “I have no intention of competing with the channel”, was the emphatic reply. He explicitly rejected the idea of hosting: “It’s not our core business and never will be. The margins are very tight anyway.” This will be a relief to the hosting companies, who know all about tough margins. He continued “I’d like to see us add value to the channel. For example, we sit on a lot of data. We can aggregate that data. There is an opportunity to look at big data. [and derive value from it]”.

Basically, the plan seems to be to analyse domain registration data and DNS traffic, and use it to target areas such as SMEs with a view to selling them something. Quite what they were selling wasn’t spelled out exactly, but domain name registrations seemed to be the only example.

It seems that the current thinking is to sell DNS products, which won’t compete with anyone much (apart from anyone selling DNS products). Why anyone should pay for DNS products is beyond me; but if you can’t manage your own DNS I suppose its possible for companies to outsource it. But I really don’t see this replacing the revenue stream, as new domain name registration income stops rising.

Rob Golding from Astutium asked what many of us were thinking – what’s so wrong with the status quo? Why not stick with one revenue stream. Nominet isn’t supposed to be a business and has no need to expand; it’d be okay to contract. Unsurprisingly, Nominet’s view was similar to that of turkeys towards Christmas. “It would be foolish not to look at opportunities to diversify”. Speaking about the saturation of the .uk namespace and future projections, Haworth continued “It’s Darwinian – we’ re not going to sit and watch things fall apart. If we see domains trending downwards, Nominet can add value to adjacent markets.”

This is an interesting situation, especially when you see who controls Nominet. Things are voted on, ultimately, by its members. This is weighted to the number of names they have registered. It’s pretty obvious that the large domain name registration businesses are going to have a far greater say than the majority of small members; those that represent the general Internet industry and general public. The big domain dealers will have millions of votes; a normal small ISP might have a few dozen. To counteract this, Nominet limits the votes of any one member to 3%, and has mechanisms in place to stop the big companies simply joining once and splitting their domain portfolios to get multiple 3% blocks. However, one still suspects that, although there appears to be no evidence that the domain dealers don’t collude in their voting, they’re all going to have the same interests and will naturally vote together – this effectively tending to control Nominet towards policies that support their business model.

Unfortunately there’s no easy way around this. Even if it was one-member-one-vote, large organisations could swamp the membership with their friends. So what keeps Nominet working in the public interest? Ultimately, scrutiny. If it went too far, an outcry could get the Government involved.

It’s also hard to see what Nominet can do in other fields. Their charter requires them to engage only in worthy projects. But according to Haworth, “This doesn’t mean yo can’t be commercial.” However, given that Nominet has a huge, secure revenue stream for investment, it clearly does have a commercial advantage over anyone else who has to raise funding through normal channels. We’ve heard this before – Bill Gates famously said that Microsoft was about making the world a better place. Whether that’s his personal philosophy or not, from a corporate perspective it has a hollow ring.

In the mean time, Nominet is intent on expanding its revenue streams. The supposed block votes of the domain dealers (all those 3%s added together) is going to limit Nominet’s ability to compete with them. 123-Reg is never going to allow Nominet to start hosting web sites and damage their own business. So what next? I, for one, will be keeping a close eye on it. I was very much heartened to see that was the general consensus of those present, including Trustees and the board.

Nominet is starting a three-month consultation on issuing domain names directly under the .uk TLD. According to Eleanor Bradley, Nominet’s Director of Operations, this development will allow new companies to purchase domain names (presumably because the .co.uk is in the hands of cyber squatters), and also be more secure by checking that the registrant has a UK address and providing daily monitoring for malicious software on the domain (presumably they mean associated web site here).

Nominet is justifying this because they say their new domain space will help to guard the UK against cyber crime, which costs the UK £27B per year.

Nominet is supposed to ensure that UK registrants are okay in any case – although it’s currently based on public complains when an anomaly is found. Their claim about ensuring that such web sites will be monitored and malware free is just about the craziest promise Nominet could be making. Whoever dreamt this up clearly has no idea about the risks and mechanisms that are used to pervert web sites for malware delivery – there is no way Nominet can check.

What I’ve heard so far is just another scheme for Nominet and cyber squatters (or domainers as they prefer to be called) to make more money. Nominet should be concentrating on the interests of Internet users in the UK, not “vibrant domain name spaces”, which basically means people trading in domain names as a commodity.