RegisterOrg is committed to the principles of promoting fair and open competition in the registry and registrar spaces, and fully appreciates the significance of enhancing competition through the redelegation of the .org registry. Register.com, RegisterOrg’s parent, is one of the most successful registrars to compete with VeriSign to date. The Company is a true industry veteran with a long history in, and commitment to, ICANN’s mission for enhancing competition, promoting entrepreneurship, and encouraging development and innovation in the domain-name industry.

By drawing upon Register.com’s lessons of success, RegisterOrg is well suited to foster the necessary levels of competition among both registries and registrars. RegisterOrg believes that true financial stability and a sound financial foundation are key parts of any registry that will help the .org TLD continue to grow and succeed.

ICANN has had enormous success to date in the introduction of competition at the registrar level. As set forth, RegisterOrg has identified ways to further bolster registrar competition upon the redelegation of the .org registry. At the registry level, by contrast, it is clear that true competition has yet to be realized.

Redelegation of the .org registry to any party outside of VeriSign is a significant step to foster competition. However, we contend that financial stability should be an important consideration as ICANN reviews the .org redelegation applications. The new .org registry operator must have the resources to effectively manage and grow the TLD. Additionally, the new operator should have technological competency and a history of building and maintaining financially successful businesses. These distinct yet complementary criteria will be crucial to the long-term competitiveness and sustainability of the .org registry’s operation. For the following reasons, we believe that RegisterOrg is most qualified to operate the .org registry in a manner that promotes competition.

Registrar Competition
ICANN has made extraordinary strides in enhancing registrar competition by creating a thorough but fair process for accrediting registrars. Beginning with the introduction of competition in the registrar marketplace in 1999, ICANN has fulfilled its mission by creating a level playing field and fostering competition at the registrar level. ICANN’s successful transition of a former monopoly into a competitive registrar name space is illustrated below.

As competition continues to take hold amongst registrars, RegisterOrg believes it can further enhance and accelerate registrar competition in the following ways:
· Provide equivalent access to the shared registry system, plus equal service and pricing for all accredited registrars;
· Offer a thick Whois service, which would benefit smaller registrars who lack the resources to provide such services themselves, as well as lower the entry costs for new registrars;
· Simplify the toolkit implementation through superior technology, thereby enabling smaller registrars with fewer resources to easily connect to the .org registry;
· Provide the highest level of support that is presently unavailable; and
· The active encouragement of new registrars with a particular interest in the .org community.

Registry Competition
While initial efforts to promote registrar competition have been successful to date, true registry competition is still in its nascent stage. Currently, the .com, .net, and .org registries continue to dominate the domain-name market with 27.5 million domain names, in spite of inroads by country code TLDs (ccTLDs), and the recent introduction of new gTLDs (.info, .biz, .name), which have only generated about 1.5 million registrations thus far. Assignment of the .org registry to a new operator will enhance competition among domain-name registries. In particular, it will transfer an established, existing registry from VeriSign’s control, allowing a competitive registry operator to enter the market and grow the .org TLD while providing enhanced services to the .org TLD’s existing domain-name database (see graph below).

Even upon the redelegation of the .org registry, VeriSign will continue to hold a dominant position in the registry marketplace.

RegisterOrg is in a unique position to become the new operator of the .org registry. RegisterOrg’s parent corporation, Register.com, has a proven track record as a successful competitor in the registrar space, and is fully committed to backing RegisterOrg so that it may successfully compete in the registry space in the years to come. Currently Register.com is the largest provider of authoritative DNS services, with over two (2) million names under management. Furthermore, while one of Register.com’s business units, Registry Advantage, does provide registry services to ccTLDs—including backend services for the restricted top-level domain .pro—Register.com does not currently operate any of the large gTLDs or any of the more established ccTLDs, such as .uk or .us. Hence, delegation of the .org registry to RegisterOrg, a Register.com subsidiary, will promote competition among new and existing players alike.

Moreover, RegisterOrg is best situated to operate .org as a competitive registry, with the financial stability to effectively manage and grow the business in the years ahead as well as strong technological competency. Register.com, RegisterOrg’s parent company, has successfully weathered difficult financial times in the global markets whereas many other industry participants have struggled or been forced to exit the field. Assigning the future of the .org domain to a company with uncertain financial prospects, particularly in view of today’s challenging economic environment, could jeopardize the health and future of the .org TLD and threaten the promise of competition.

Since Register.com’s inception in 1994, the company has supported its own funding requirements. With a cash balance that has grown over the past several quarters to over $200 million in cash and equivalent investments, Register.com can invest in its own operations and other businesses such as RegisterOrg without accessing the capital markets. The financial, technological, and human-resources strengths of the organization will provide ICANN and the noncommercial community with the stability and security needed to ensure the registry operation will be managed as efficiently as possible.

Register.com’s strong financial situation is particularly helpful given the changing dynamics within the overall financial markets. In the past few years, many new companies have received funding from venture investors to capitalize on opportunities within the domain-name industry.

Many of these start-ups are filing for bankruptcy due to lack of funding, depletion of cash, poor direction, and unsound business models. Moreover, investor groups are scaling back their investment activities, citing lack of interest in the capital and public markets and, more importantly, their inability to achieve financial returns quickly. This is clearly displayed in the graph below, showing the drop off in the venture funding to start-up companies.

Due to the decline in support by capital markets, consolidation in the domain name industry is inevitable, and extremely active. Competition in the registry space will be negatively impacted by this activity if the .org registry is assigned to an operator whose future viability is uncertain. This will be of particular concern if the new operator is relying on third-party funding or existing cash flows from registry operations to fund its needs or the needs of the .org registry. In either situation, that new registry operator could directly jeopardize the success of the .org registry operation.

In addition to changing industry dynamics, the demand for .org domain names has continued to decline in the past year, and lost market share in 2001. The future success of the .org TLD will depend on the operator’s ability to recognize its potential, develop a plan to retain its current customer base and then offer the foresight and financial support needed to grow the .org registry into a vibrant and growing opportunity for registrars.

Again, RegisterOrg is uniquely positioned in this respect with the long history, superior technological capabilities, and financial strength of Register.com behind it.

Over the past six years, Register.com has built a successful and rewarding business in the domain-name industry. Register.com has proven itself to be a formidable force by focusing on the needs of its customers and providing competent technical expertise.

The Company’s consistent, profitable growth has attracted the highest caliber of employees, who have shown technical proficiency and business savvy that continue to fuel the growth engine of Register.com. Additionally, the Company’s ability to continue to build its cash position through quarterly profits makes it one of the few in the industry to self-support its growth. This strong financial position will allow the Company to support the .org registry operations more successfully than others, and to fund the required investments. Such characteristics are critical in fostering registry competition by ensuring that .org will be a strong and growing TLD.

Moreover, in accordance with RegisterOrg’s obligations, Register.com, as a sub-contractor, would ensure that its registry and registrar operations were maintained separately to comply with the separation requirements imposed upon gTLDs by ICANN. In fact, Register.com’s registry services business unit, Registry Advantage, is the outsourced provider of registry services to .pro, and is already complying with such requirements. Therefore, the Company would easily be able to comply with similar requirements for .org.

In conclusion, RegisterOrg believes that a commercial operator would foster competition more than a not-for-profit because it is has incentive to grow the customer base and will be a leader in technology and services to support registrants.