Webvision, in business for 15 years as an integrated e-commerce systems development, deployment and management company, has established a performance record that has convinced customers and investors of future growth and sound management. Operating a new TLD will be a new line of business for Webvision. The formation and operation of a new business line involves various types of risks and opportunities both internal to the new business and external. We look forward to assisting ICANN in conducting its investigation of Group One Registry’s proposed affairs and markets. In addition to matters set forth elsewhere in this proposal, the factors set forth below are risks and opportunities relating to our business.
Group One Registry has firm commitments for capital with which to leverage their opportunities.
Prior to submitting this application, Group One Registry has obtained firm commitments for capital funding well in excess of those amounts anticipated to be required to build the proposed infrastructure. Negotiations with other prospective investors are ongoing. This ensures that Group One Registry can move quickly to implement service and leverage the communication power of the Internet for all users.
Our competitive environment can be significantly impacted through the introduction of new TLDs as authorized by ICANN.
As we have stated in our proposal, we believe our business model has a significant competitive advantage over existing TLDs for domain names demanded by information appliances other than PCs and Email domain names. We plan to utilize this advantage to support the necessary capital to ensure the stability of our service base and earn a return on investment for our investors. There is a risk that ICANN will authorize the creation of new TLDs with business models similar to ours that will erode our competitive advantage.
The minimum payment to the Registry Operator by the Sponsoring Organization will be fixed and competitive.
After the initial term of the Registry Operator agreement expires, it is anticipated that the Sponsoring Organization will seek competitive bids for the operation of the registry. This competition will necessitate the setting of a competitive minimum operating fee for the Registry Operator. Once a minimum payment is negotiated between the Registry Operator and the Sponsoring Organization, the registry operator’s anticipated profit margin will be determined. Should the Registry Operator’s costs be in excess of those projected, a loss may result.
Group One Registry’s proposed TLD fosters competition.
Through Group One Registry’s volume discounting of domain names, competition among TLDs will be enhanced. Lower average prices could potentially bringing new users into the market that were otherwise excluded based on price. This will enhance the utility of the entire Internet community.
Group One Registry’s data will be safe.
The capital infrastructure proposed will include two redundant systems to ensure seamless functioning of Webvision’s services should one system fail. Further, Group One Registry’s data will be backed up on Webvision’s own servers in an alternate location. In addition to the redundant systems and the separately located backup on Webvision’s own servers, Webvision will escrow all of the Registry’s critical data in order to provide a backup should the unlikely event of total system failure occur in multiple locations.
The new TLD being proposed is expected to enter a largely untapped market and because of this, we face both opportunity and uncertainty of business development and future revenue.
Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business line in an emerging, rapidly evolving and highly competitive industry. We may not generate revenue from our activities sufficient to support operations or achieve profitability for this new line. Until we can generate revenues in excess of expenses, we will need to obtain operating funds from other internal Webvision sources and from external sources.
We feel this risk is mitigated by several factors. The technical requirements for operating and maintaining a new TLD are well known by Group One Registry’s proposed investor and collaborator, Mr. Paul Kane. Mr. Kane operates three ccTLDs and provides management duties for many others. Webvision’s own management has a wide range of experience in operating its e-commerce business and, through its acquisition of eNom, Inc., has experience as one of the leading registrars of the Internet.
These risk-mitigating factors also present opportunities for management to leverage existing resources and know-how to respond quickly and successfully to the ever-changing Internet environment. Webvision and its partners provide an existing base of talented technical and customer support staff that can be easily trained with the new skills that the operation of a TLD will require. In addition, with Webvision’s existing base of staff and partners, Webvision will have additional resources to bring to bear should unexpected events require technical or other expertise.
Our pro-forma financial projections are based on assumptions that may not prove to be correct or obtainable.
Our pro-forma estimated revenue is based on registered users using internet-ready appliances such as cell phones, PDAs, Internet Gaming consoles and other appliances for which an established market is only beginning. While our capture rate for these users is initially small, we assume our market share to increase through our domain naming structure and marketing efforts. This assumption may not prove to be correct.
Our pro-forma estimated costs are also based on assumptions of necessary hardware, software and labor services. While we have obtained a firm commitment for funding and are confident that we will be able to build the necessary infrastructure for a safe and reliable registry, our assumptions may not prove to be correct.
Unlike most character-focused TLDs, our new TLD will be numeric based and will therefore avoid a variety of potential intellectual property conflicts.
It is our assumption that numeric based domain names will be virtually free from potential trademark conflicts. While this provides advantages for selling large blocks of numbered domain names to potential customers (like telephone companies), it is assumed that customers will not demand numbered domain names as commercial trademarks. Our pro-forma financial projections therefore assume that we will not obtain significant penetration into the market for web servers that have heretofore been primarily associated with trademarked domain names.
The sponsoring organization’s minimum payment to the registry operator will not be sufficient to cover the registry operator’s costs.