A. General Description of the Application
  1. TLD String(s) Requested.
  2. Category.
    General Purpose, General.

    Image Online Design, Inc. (“IOD”) requests .web, an unrestricted TLD. IOD targets the broadest possible registrant base and end user group with almost exclusive focus on commercial uses. As such, IOD qualifies for the general purpose category, general group.
  3. Sponsor, Registry Operator and Subcontractor.
    a. Sponsor. Unsponsored Application.
    b. Registry Operator. IOD, a California corporation with its principal address in San Luis Obispo, California was formed in 1995 as a webhosting and design company. In 1996, the company decided to expand its operations to pursue becoming an Internet name registry. Since that time, IOD has operated the .web TLD name registry. Although not readily accessible to most Internet users, browsers may be configured to resolve domain names ending in .web. Despite these limitations, IOD claims to have registered nearly 20,000 .web domain names in over 95 countries. UltraDNS Corporation ("UltraDNS") will host, operate and manage the .web DNS zone server system. GST Telecommunications, Inc. ("GST") will provide physical facilities for the .web registry data center in San Luis Obispo, California.
    c. Subcontractor. UltraDNS claims to leverage a unique and innovative technology platform for a variety of advanced, services-based solutions that enable customers to deploy and manage global directory-initiated information exchange applications. IOD claims that GST provides secure locations for equipment as well as redundant power and network connectivity. IOD also claims that the GST network is fully redundant and all facilities are built to the highest telecommunications standards.
  4. Registry-Registrar Model.
    Initially, all registrations in the new TLD will be processed by IOD. Soon after entering the root, IOD intends that all domain names will be processed by ICANN accredited registrars. IOD plans to divest its registrar operations, forming a separate company (Image Online Design Registrar Company). IOD expects that Image Online Design Registrar Company will seek ICANN accreditation.

B. Technical Review
  1. Summary Description of Proposal.
    IOD wants to convert a small unofficial TLD it currently runs called .web into an official TLD by the same name. It has several years experience running a small registry (20,000 names), but purports to be capable of running a much larger registry (projected to be in the millions).
  2. Support of the Business Plan by the Technical Plan.
    a. Total Capacity. It is not clear if IOD can manage the higher level of capacity. Its simulations suggest it can, but IOD has no experience operating any kind of system at this scale. Also, the current registry is “unofficial”, so it is likely that all aspects of its operation are much less complex and troublesome than an “official” registry of similar size.
    b. Projected Growth Rate. Rapid. IOD expects 200,000 registrations quickly.
    c. Startup Period. There are no special proposals on this subject. IOD believes that it will handle start-up surge by providing adequate capacity. Its start-up plan is based on first-come first serve registration. There is only a very short trademark notification window.
    d. Fault Tolerance. DNS services will be hosted by UltraDNS, which provides strong fault tolerance. The registry service will be hosted by GST Telecommunications, which (unlike UltraDNS) does not itself offer fault tolerant capabilities beyond multiple network links to the facility. It is not clear that IOD’s design for the registry has sufficient fault tolerance. IOD plans to bring a second mirror facility on line on the East Coast, but it is unclear when this would happen. Procedures for ensuring proper distributed operations between these facilities are little discussed in the proposal. To provide the high level of availability expected from a large registry applicant should consider including warm or hot fail-over capability in the initial deployment. The proposal forecasts an impressive 99.99% uptime for the registry service.
    e. Security. IOD has demonstrated experience handling security for a single installation system. They show less experience in distributed systems security, which becomes important when dealing with off-site registrars (currently, the only .web registrar is themselves) and the mirrored registry facility. It does not discuss logging and auditing in much detail, nor does it discuss a strategy to perform ongoing security reviews of its system.
  3. Summary of Relevant Experience.
    IOD’s experience is based on running the unofficial .web TLD. It has run it for a number of years, and it is a full-service TLD, with billing, customer service, etc. It is small, at 20,000 entries. IOD does not have substantial demonstrated experience with large scale systems. Current staff consists of three persons, only one of whom is technical. The non-technical management team has no experience in large-scale system operation. Proposed staffing plans are less impressive than in other proposals.
  4. Apparent Implementation Risks.
    IOD’s plan to handle scaling may not work, in which case they would be unable to handle the likely high demand for their system. This is particularly important because the plan does not include a start-up throttling mechanism. Therefore, its modest system, even if scaled up in terms of hardware, will be exposed to a very high load immediately.

    The current registry operation is apparently supported by only one technical person. To operate the type of registry and registrar operation envisioned, the applicant would need to do extensive open hiring of management, technical and support team members. This hiring would need to be accomplished in an area with limited available technical personnel.

    Although the registry is currently operational, it is based on a proprietary registry protocol. IOD would need to develop, test and certify RRP in order to inter-operate with current accredited registrars.

    IOD would initially operate as registry and registrar. Although this approach may make it easier to control the establishment of the initial system, it also means that IOD must scale its registrar operation from its present modest size. If IOD were to rely initially on the existing applicant community the need for such scaling would be greatly reduced, but it would increase the demand on other services.
  5. Available of Human, Operational and Technical Resources to Cope with Unexpected Events.
    The company is very small, though they have demonstrated competence in all relevant areas by running a register/registrar operation. Their subcontracting partners, especially UltraDNS, have good resources to handle emergencies that fit within their responsibilities. Use of UltraDNS has allowed the applicant to outsource an important part of registry operation to a sub-contractor with a good level of experience.
  6. Advancing the State of the Art.
    UltraDNS provides an enhanced version of BIND that provide for near instantaneous zone file updates.
  7. Other Comments.

C. Business Review
  1. Applicant’s Representations.
    IOD’s goal is to more firmly establish the unrestricted .web TLD and to compete directly with .com, .net, and .org. IOD was formed in November 1995 and has operated the .web top-level domain name registry since 1996. Since this time the organization has registered approximately 20,000 names. It has also historically provided web hosting and design services. The company’s mission is “to position ourselves as a global innovator of Internet systems that enhance the utility and stability of the Internet.” After five years of operation, IOD has four employees, total revenue of $535,000 for the eight months ending August 2000 and total cash of $287,000 as of August 2000.

    The revenue model for the registry is subscription based with proposed registry charges of $15 and registrar charges of $20 for a total of $35. IOD has also proposed that it will be the only registrar in the first year. The pro forma financial statement projects an 80 to 70 percent market share in year two declining to 30 percent in year five. IOD is anticipating a 19% penetration rate in the first quarter based in part upon similar growth patterns from Network Solutions from March 1996 through March 1998. This results in total registrations of approximately 1.6 million and 3.8 million in the first and fourth years, respectively. Overall, IOD is planning to capture market share similar to that of .net.
  2. ICANN’s Evaluation.
    The strengths of this application lie in its general understanding of the Internet domain name market. The weaknesses of this application lie in its less than realistic plans. First, IOD expects to obtain a 15 to 23 percent market share of all new registrations in the very first quarter of operation, even with additional competition from other new top-level domains. It assumes one third of these applications will be for prepaid registrations of five to ten year increments at a combined registry/registrar price of $35 per name per year. This combination creates a very large influx of money to finance operations, with IOD’s cash balance increasing from $450,000 to $37.4 million in three months at the 50 percent confidence level, which is 83 times larger. The need for this influx presumably is the motivation for IOD’s insistence on being the sole registrar during startup. Nonetheless, the business/technical team does not believe these projections are realistic. Second, according to the pro-forma financial statements, IOD will act as the registry and the sole registrar for the entire first year. Even by the end of the fourth year, after other registrants have been permitted to compete for three years, IOD estimates that it will still obtain a 30 percent registrar market share within the TLD, and that it will do so with a $20.00 registrar markup. This is inconsistent with experience in .com, .net and .org.

    Despite this new competition, IOD anticipates maintaining its $15 registry price throughout the forecast period. This is at least two and a half times the registry prices anticipated by others in this category. This higher price is likely to deter registrars and potential registrants. In addition, with any new venture, there are always many unknown factors that will occur. For this category, becoming a viable competitor within the existing structure is key. Holding only $450,000 is a significantly weaker capital position than the capital positions of the other applicants. Based upon its historical experience, IOD has not demonstrated the ability to grow, even when performing other services, such as web hosting and design. Moreover, two of the four employees, the Chief Executive Officer and the Chief Operating Officer, are performing two roles. The planned management is working at Toyota San Luis Obispo as the Chief Executive Officer and Business Manager. This dual responsibility could potentially become problematic for the registry operation. Overall, the other applications in this group are significantly more realistic and would result in much more viable competition for the .com registry.

D. Summary of Public Comments
  1. Number of Comments.

    At least 118 different people posted comments.

    1 person posted 40 comments.
    1 person posted 30 comments.
    2 people posted between 20 and 25 comments.
    1 person posted 15 comments.
    9 people posted between 10 and 14 comments each.
    9 people posted between 5 and 9 comments each.

    At least 165 of the posts were ad hominen comments between individual and at least 40 of the comments were off-topic.
  2. Support for the Application.
    Several of the people who posted comments in support of the application said they had existing .web registrations with IOD.

    “To the extent of my knowledge, IOD is among the most prepared applicants for any new TLD. Their preparation and labor should indeed be rewarded…”

    “I’d like to add my voice to those supporting IO Design’s .WEB application. I have been registering names at their registry for the past few years… They have consistently maintained the basic registry service and responded to issues presented during this time. They have shown a consistent and willing entrepreneurial pursuit of the business.”

    “The internet represents to me the chance to compete. Locking IOD out at this point, given all that has happened, would sure seem like an affront to competition.”

    “IODesign is running a .web registry since 1996… These registrations were necessary to test the functionality of the .web registry and allowed IODesign to collect money to run and maintain it and eventually to file the application to ICANN for .web. … If this happens [.web is assigned to Afilias or Nuestar], IODesign’s long work will be destroyed and the company itself will be ruined. This is completely unfair, since it is not fair to ruin a company that believed in .web TLD since 1996 and acted in good faith for this purpose only. To be a pioneer can’t be considered a fault!”

    “Based on IOD’s application for .WEB, it is obvious to most watchers … that IOD qualifies for the ‘pioneers preference’ exemption. Basically, IOD built .WEB into a viable product… It would not be fair to IOD or IOD’s customers, to award the treasure of .WEB to those who only watched as IOD built something substantial from nothing.”

    “As one of the many who already ‘registered’ a WEB name with IOD, I feel that it is only fair to give them the first divvies at the Registry as they started to push it long before the 500 pound gorilla which is NetSol got their eyes on it. The Internet seems to be drowning in the ‘biggest and those with the most expensive lawyers win’. Let’s see some of the ‘small fries’ win for a change.”

    “Let dot web be something that represents consensus; give it your blessing and leave it alone. Otherwise, if you take away our dreams, and put them in the hands of speculators with bulk scripts, you’ll turn dot web into a parking lot full of For Sale signs on domains that no one will want to use. Come on ICANN, give us REAL competition. Give us our Internet.”

    “The internet represents to me the chance to compete. Locking IOD out at this point, given all that has happened, would sure seem like an affront to competition.”

    “There is a great need for a new unrestricted TLD to compete with the IS-centric .com. The Internet is for the world not just the US. .WEB is the far most suitable string for this purpose as it works very well world-wide… To me IO Design’s application looks very serious. They’ve also been around for awhile and have always shown respect to the process and to their customers.”

    “Since 1996 IOD is a reliable partner for registering the .web TLD. Their effort should be rewarded. As a registrant I have faith in this organization. Their system of registry works reliable [sic] and fast.”

    “.Web es el major dominio de toda la tierra. Image Online Design lo viene preperando desde 1996, que estan esperando para agregarlo como un dominio de premer nivel? Internet va a mejorar si esto pasa.”

    “IODesign has demonstrated their professionalism and had confirmed their ability to provide the service sorely needed by this world wide community.”
  3. Opposition to Application.
    “Image Online Design cites their operation of their .web registry system as evidence of their competence and ability to handle the demands of running a registry. 20,000 pre-registrations over a period of nearly 5 years is not a substantial figure. While it does show some ability, it’s quite obvious that in the first few DAYS of operation, a .web registry would see more than that many registrations. Therefore, I don’t think having 20,000 pre-registrations shows beyond a doubt that they have the ability to ran a registry in the real world.”

    “…they will be the only company allowed to register .web domains for the first 30 days of operation. Why lock out the other ICANN accredited registrars for the first 30 days? Obviously to prevent competition. IODesign wants to capitalize on the rush to register. If anything is anti-competitive, it’s this.”

    “IOD’s self-proclaimed registry have only been known and recognized by a small number of experienced Internet users but to the public is almost anonymous. Registration has been going on for a number of years to this narrow group… [T]here’s a high risk that IOD will immediately go out of business not being able to handle the 10,000,000+ registrations… What could save IOD then? Well, the only thing that could save IOD is money – a lot of money. Where will they find this money? Easy – by selling out all or parts of the business. Who will benefit from that? The answer is there will be two winners: (1) Christopher Ambler will become a very rich man selling his company; (2) the company taking control of IOD. And that will be a large company. Let me guess who that potential buyer will be? … You can bet that this will, again, give Internet control to some big US-based company.”

    “A web address consists generally of 3 parts separated by dots. It starts with www (world wide web). Why should it end with .web as well? It does not bring any additional information. Why not use this last piece to add some information to the address.”

    “The point of a TLD is it tells you something about the rest of the domain. .COM tells me that the domain is commercial as opposed to .EDU, .MIL etc. In the early days of the internet this was all that was required. The problem now is that so many commercial users are on the internet that the .COM domain is too narrow to be informative. So .WEB tells me what exactly about the domain? That they are on the web? Couldn't I have figured that out for myself? .WEB is as uninformative as .COM. … The effect of the limited domain range has been to create an artificial market in ‘cybersquatted’ domain names. .WEB does nothing to solve this. Just because a lot of people want .WEB doesn't make it a good idea.”
  4. Substantive Comments and/or Questions.
    “It’s kind of ironic that these IODesign supporters throw around terms like ‘anti-competitive,’ ‘conspiracy,’ ‘conflict of interest,’ etc., when they themselves are guilty of the same… The people I recognize all hold pre-registrations with IODesigns and thus have their own conflicts of interest (some are even domain name speculators/cybersquatters). And why do they wish ICANN to recognize pre-registrations? Obviously so that they don’t have to face competition from other people wishing to register ‘prime domains.’ The point? Conflicts of interest and anti-competitive behavior work both ways.”

    “I own about 400 hundred [sic] ‘.web’ domains registered through IOD…My sites fall into several of my favorite categories, like religion, technical, and common words. My purchase of .web domains from IOD was intended to help grow my domain name service business. All of the .web domains were bought with the intent of offering web and email service, just like the services currently offered with my 100+ .comnetorg domains… It is not part of my business model to ‘trade’ or ‘speculate’ in domains. This does not mean that I will not sell a website or domain… I would really love to have somebody come along and buy part interest in some of the popular domain names I run (for big bucks of course)… By leaving the IOD version of .web in the alternate root, you would be encouraging a split in the root.”

    “It’s a disgrace that the majority of dot web addresses are currently squatted. If you look for any generic English name they all appear to be bought by Americans… If you are going to allow dot web addresses then you should start the race at the beginning and give everyone a fair chance otherwise it is not equitable globally and not a level playing field between all participants.”

    “Given the fact that not only had the existence of a .web registry never been officially announced, but that ICANN themselves have told people like myself that there is nobody who has given permission to register new TLDs, I feel it would be unfair and quite hypocritical for ICANN to allow current pre-registrations/registrations to stand.”

    “Only fair way to give IOD the .web TLD is to open it up by clearing the database first, and doing a round robin ‘batch’ system through all the registrars. Then everyone gets an equal shot.”

    “What if … your application is accepted by ICANN but you have to wipe out all existing pre-registrations? What are you going to do with your existing customers? Are you going to give them credits for new registrations?”

    [Answer from Christopher Ambler: “As to the existing registrants, I can’t imagine that ICANN would have a compelling argument to remove them… [We’re not considering it a possibility at this time.”]

    “A close review of this application indicates a significant lack of concern and emphasis on the part of the applicant with respect to the global nature of expansion in the name space proposed by the ICANN board.”

    “…the fact that NSI is clearly very profitable doing business at $6 indicates to me that a $15 registry fee is excessive.”