Sponsoring Organization’s Proposal
The sponsoring organization is Number.tel LLC, a for-profit limited liability company. Number.tel will conduct its operations under the overall supervision of a non-profit corporation, the Tel Oversight Board (TOB). The relationship between Number.tel, ICANN, and TOB will be set out in a contract among all three parties. (Throughout the application, we refer to this contract as the Master Agreement.) Under our proposal, Number.tel will have the exclusive right to market and sell to registrars rights to register domain names using the .tel TLD under the terms and limitations set out in the Master Agreement. Subject to certain limitations, TOB will have the power to set the maximum registration fee Number.tel charges to registrars for registration of domain names.
Number.tel will operate under the general direction of its board of directors. A number of experienced individuals have agreed to serve as directors. See Attachments 1 and 2. The directors will select experienced individuals to serve as officers and staff. Some of the directors will also serve as officers. The Number.tel operating agreement is attached as Attachment 3.
Number.tel is a for-profit limited liability company, registered under the laws of the State of California. Its principal place of business is 16563 Via de Santa Fe, Rancho Santa Fe, California 92067. We anticipate that it will have at least two other significant offices, one in Europe and one in Asia. It will also have sales representatives in countries throughout the world.
At this time, eight individuals, all of whom have international business experience, have agreed to serve as directors. Two of these individuals now serve as the principal managers of the LLC. Current officers include a Chief Operating Officer, Chief Technical Officer, Vice President for Public Relations, and Vice President for Marketing. See Attachment 1. We anticipate that the number of employees will grow substantially if our proposal is adopted.
Number.tel will operate under the overall supervision of ICANN and TOB pursuant to the terms of the Master Agreement. Number.tel has these basic functions: 1) under the direction of ICANN, it will take steps to organize and support the TOB; 2) it will sell registration rights for use of the new TLD to registrars; 3) it will license accredited registrars to sell directly to registrants and domain name owners and, where appropriate, it will identify potential new registrars and assist them in the accreditation process; 4) it will engage in extensive marketing in the United States and around the world to acquaint potential users with the new TLD; and 5) it will contract with the registry operator to provide database management and other services. These functions are described in more detail below.
Under our proposal, Number.tel will operate under the overall supervision of ICANN and TOB pursuant to the terms of the Master Agreement. When the TOB is fully functioning, much of the basic oversight responsibility can be transferred to TOB. We believe it is crucial that the TOB is a well-funded, well-staffed organization, which can oversee the use of the ".tel" TLD and which can respond to the needs of the user community. Consequently, we propose that 20% of Number.tel’s net income be allocated to TOB. We believe that these revenues will eventually be substantial. Nevertheless, the TOB will require significant staff and technical support for the first year or two of its existence until it can become self-sustaining. Number.tel will ensure that the newly created TOB will have office space and staff support by guaranteeing to set aside at least $250,000 per year for TOB regardless of its net income.
It is also crucial that TOB is an independent board and that there is no conflict of interest between persons serving on the TOB and persons associated with Number.tel. We propose that the board of TOB be made up of 15 individuals, including at least three persons who have a strong background in the formation and development of the Internet, at least three who are chosen to represent the user community, at least three who have a background in international law, international economic development or international relations, and at least three who are chosen because of their exceptional background in serving the public interest either in the public sector or in the non-profit community. We are submitting a list of individuals who have expressed strong interest in serving on the board, along with their resumes. See Attachments 4 and 5. We believe these individuals would be excellent choices. However, we propose that ICANN select all the board members in order to ensure independence and to avoid a conflict of interest.
C4.2. Registering New Domain Names
The basic function of Number.tel is to market the new domain name and license registrars to sell these names to individual registrants. It will have the exclusive right to register domain names using the .tel TLD. We anticipate that this TLD will provide substantial competition with current and new TLDs.
Number.tel will deal only with ICANN-accredited registrars, and it is anticipated that it will deal with all registrars who are currently accredited. We anticipate engaging in efforts to identify potential new registrars in areas of the world where registrations have been relatively low, including Latin America, Africa and parts of Asia. We will identify potential registrars and provide technical assistance to them in applying for ICANN accreditation. In addition, we anticipate that Number.tel will identify new channels of registration that lower costs to consumers. For example, entities that send consumers monthly invoices for services and verify their telephone numbers for other purposes, such as telephone companies and financial institutions, may be able to provide inexpensive registration services for consumers.
Number.tel will engage in extensive marketing efforts throughout the world to explain the new TLD and to promote its use. Number.tel has reached a Memorandum of Understanding with Pioneer Electronics of Taiwan to assist in marketing efforts in Asia. See Attachment 6 We anticipate that it will negotiate similar agreements with other established companies in Europe, Latin America, Africa and North America. Number.tel has allocated substantial funds in its business plan for these efforts. (See section C12. below and the Business Plan Summary, Attachment 7.)
C4.5. Contract with a Registry Operator
Number.tel will contract with a registry operator with the technical and financial capabilities to provide database management services for a substantial volume of domain names. We anticipate that the registry operator will also provide a variety of support services to Number.tel. Our initial registry operator will be Tucows International Corp. in Toronto, Canada. The term of the initial contract is four years. Thereafter, the contract will be renewed every two years. The selection of the registry operator will be determined by Number.tel. A Memorandum of Understanding with Tucows is attached as Attachment 8, along with issues that would be addressed in a final agreement, Attachment 9.
The TLD we propose would be used by a broad range of individuals, businesses and organizations throughout the world because of its ease of application and accessibility. In many cases, it would be used as a second domain name to provide a link to an existing website. Consequently, we anticipate substantial use by companies and organizations in North American and Europe that now have a domain name using an established TLD.
In addition, we believe that the .tel TLD would be particularly useful to the international community by avoiding language barriers in registering and using domain names. We anticipate that there will be substantial use of this TLD in underdeveloped countries and in countries whose languages are not based on Latin alphabetic characters. Because we anticipate extensive use of this TLD outside North American and Europe, we recommend that a significant number of individuals from Latin America, Africa and Asia, or individuals with close ties to those countries, serve on the TOB. For a more complete discussion, see the Executive Summary attached to the Description of TLD Policies, Tab E.
The TOB should consist of a representative cross-section of individuals who will be responsive to the needs of the user community and broader public policy and public interest concerns. The TOB should include individuals who have been active in Internet policy issues and who have distinguished themselves as sensitive to user needs. It should also include individuals who have expertise in international law and international economic development and individuals who have had a distinguished record of public service.
We proposed that a number of provision by included in the Master Agreement to ensure that the TOB receives significant input from the user community, including:
· conducting a conference four times a year with the user community in conjunction with the ICANN conferences;
· identifying a staff member of TOB as Ombudsman who will review consumer complaints and who will have the authority to ask Number.tel and the registry to take action to review them and report the TOB regarding their responses;
· providing an “800” number to receive consumer complaints and questions;
· periodic conferences involving representatives of the TOB, Number.tel, the Registry Operator, and selected registrars to discuss consumer complaints, the possibilities for improving service, opportunities for expanded use of the TLD by various communities throughout the world;
· website posting of all minutes of TOB board meetings in at least ten languages;
· free language translation of e-mails by users to facilitate communication among users and between users and the TOB.
We believe that all these devices will be useful in ensuring that the TLD is responsive to the user community. However, we believe that competition will ultimately best serve the user community. Consequently, Number.tel intends to engage in vigorous and extensive marketing efforts to expand use of the TLD while developing channels for registration that provide low costs and excellent service to consumers.
C7. Openness and Transparency
The Master Agreement will include a number of provisions to ensure openness and transparency. For example, it will require that the following information, applicable to both organizations, will be posted on the TOB website:
· Articles of incorporation
· Members of the Board of Directors and a biographical sketch
· Names of all staff
· Minutes of all meetings
· All financial statements filed with any public body
· Contact Information
All these documents will be posted in at least ten major languages.
In addition, the TOB will regularly post information about its efforts to promote use of the Internet in underdeveloped countries and to solicit recommendations and grant proposals. The TOB will post notices of their meetings in advance on their website and to the extent possible meet in a facility that allows the public, including press, to observe their meetings.
C8. Initial Directors and Staff
C8.1. TOB. The directors of TOB will be chosen by ICANN. We have identified a number of individuals who have expressed strong interest in being on the board. See Attachment 4. We anticipate that the TOB will eventually have a significant staff capable of monitoring the use of the .tel TLD and overseeing the allocation of funds in furtherance of its mission. If necessary, Number.tel will provide an interim executive director until the board is sufficiently constituted to select its own executive director. The permanent executive director would select additional staff with the approval of the board.
C8.2 Number.tel. The initial directors of Number.tel, along with their resumes, are attached as Attachments 1 and 2. Over time, we anticipate a substantial growth in the staff of Number.tel. (See section C12. below and the Business Plan Summary, Attachment 7.)
C9. Selection of Directors, Officers, Members, and Staff
C9.1. TOB. We propose that the TOB have 15 members and that ICANN designate the initial directors. Thereafter, the sitting directors would nominate new directors as terms of directors expire and ICANN would make the final determination regarding new directors. In cases where a vacancy occurs before the expiration of a term, a replacement could be designated by two thirds of the remaining members of the TOB directors.
For selection of directors and officers, term of service, compensation, liability, conflicts of interest, resignation, removal and vacancies, see sections Fifth & Eighth of the TOB articles, which are attached as Attachment 10, and Article IV & VI of the TOB bylaws, which are attached as Attachment 11. Staff will be hired by the executive director, under the supervision of the board of directors. Staff compensation will be set by the TOB. Staff compensation will be competitive with salaries and benefits offered by comparable non-profit entities for persons with the same set of skills and experience. The directors will receive no compensation.
C9.2. Number.tel. For selection of directors and officers, term of service, compensation, liability, conflicts of interest, resignation, removal and vacancies, see Article 6 of the Number.tel operating agreement, which is attached as Attachment 3. In general, the members select the directors who in turn select the officers. Staff of Number.tel will be hired by the managing members or their designee. Staff compensation will be competitive with salaries and benefits offered by comparable private companies for persons with the same set of skills and experience.
C10. Policy-making Procedures
C10.1. TOB. The Master Agreement will be consistent with the Description of TLD Policies, Tab E. The TOB will be bound by this agreement. In general, decisions by the TOB will require the presence of a quorum and a majority vote of directors who are present. In some cases a two-thirds votes is required. For example, amending the articles and nominating new directors requires a two thirds vote of the incumbent directors. For general decision-making procedures, see the following sections of the TOB bylaws Attachment 11: Vacancies, 4.03; Removal, 4.05; Quorum, 4.07; Actions without meeting, 4.09; Committees, 5.01; Amendment, 7.04.
Although the TOB will have the power to amend the Articles and Bylaws under procedures established therein, all amendments and other policies must be consistent with the Master Agreement as well as federal and state law. (For the procedure for amending the Articles of Incorporation and Bylaws of TOB and Number.tel, see C14. below.)
C10.2. Number.tel. All significant policies will be made by the Number.tel. board of directors, according to the procedures set out in the membership agreement. See section 6.1 of the operating agreement, which is attached as Attachment 3.
C11. Meetings and Communications
C11.1. TOB. The frequency of regularly scheduled meetings for TOB is four times per year. See section 4.08 of the TOB Bylaws, Attachment 11. The TOB will make efforts to communicate its proceedings and decisions to the user community and the public generally. (See C6. and C7. above.) For other procedures, including telephone meetings, the right to call special meetings, etc., see sections 4.09 of the TOB bylaws, Attachment 11.
C11.2. Number.tel. For procedures regarding meetings, see section 6.5 of the operating agreement Attachment 3.
C12. Fiscal Information
A central goal of our proposal is to serve the user community while creating sufficient incentives to private investors to provide healthy competition to other domain names. These goals must be achieved in the context of considerable uncertainty about the demand for domain names throughout the world, the reaction of the user community to our proposed TLD, and the TLDs that will be available.
We believe a “.tel” TLD will be widely popular throughout the world. Consequently, we anticipate that registrations will generate substantial revenues, which are sufficient to cover costs, provide a reasonable return to investors, and allow a significant share of revenue to be allocated to ICANN and TOB. There is significant uncertainty regarding the number of users, and, thus, revenue, in the short-term and in the long run. Nevertheless, Number.tel is prepared to engaged in a significant marketing effort in order to promote the new TLD and to provide excellent service to users.
Our financial model assumes that the registration fee charged by Number.tel to registrars will not exceed $6.00 per domain name per year for the first three years. (Our financial estimates assume a small decline each year.) Thereafter, the TOB would establish a cap on the registration fee, subject to provisions in the Master Agreement that the fee must be set to cover costs and ensure a reasonable return on investment. We anticipate that Number.tel will set fees that respond to market conditions and provide aggressive competition with other TLDs.
A Business Plan Summary for Number.tel is attached as Attachment 7, which includes more detailed financial information. This business plan provides for an investment of up to $20 million by Number.tel members (shareholders). It also assumes revenues for the first three years at three different confidence levels, estimates expenditures in major categories, and provides for an allocation of a share of net income TOB. We propose to allocate 20% of net income to TOB, provided that the allocation to TOB will be at least $250,000 per year. We anticipate the funds allocated to TOB will significantly exceed this amount by the third year.
Audits and annual statements would be prepared by certified public accountants in conformity with standard accounting conventions and all applicable laws.
C13.1. TOB. In general, the liabilities of directors, officers and staff will be governed by federal and state law. Under some circumstances, certain liabilities could attach because of actions in violation of law, breach of contract, or violation of the articles or bylaw. We do not anticipate significant exposure to liability for directors, officers or staff. We anticipate that TOB will provide standard liability insurance for these individuals.
C13.2. Number.tel. In general, the liabilities of directors, officers and staff will be governed by federal and state law. Under some circumstances, certain liabilities could attach because of actions in violation of law, breach of contract, breach of the membership agreement, self-dealing or gross negligence in the performance of their responsibilities. We anticipate that Number.tel will provide standard liability insurance for these individuals.
C14. Amendment of Articles of Incorporation and Bylaws
C14.1. TOB. For amendment procedures, see section 7.04 of the TOB bylaws, Attachment 11.
C14.2. Number.tel. . For amendment procedures, see section 10.1 of the Number.tel operating agreement, Attachment 3.
C15. Reconsideration and Review
C15.1. TOB. There are no special procedures for reconsideration and review of earlier decision. The decision-making procedures for initial decisions would apply.
C15.2. Number.tel. There are no special procedures for reconsideration and review of earlier decision. The decision-making procedures for initial decisions would apply.
Number. tel is not contemplating a delegation of authority outside of the construct illustrated in RFC 1591 by Jon Postel. Where required, Number.tel will work in consultation with ICANN to ensure a consistent application of these principles.
III. CONTRACT TERMS WITH REGISTRY OPERATOR
C17. Identification of Registry Operator
535 Fifth Avenue, 17th Floor
New York, NY 10017
Toll Free: (800) 371-6992
International Toll Free: IAC (800) 371-6992
C18. Contract with Registry Operator
A copy of a Memorandum of Understanding with the registry operator is attached as Attachment 8. A copy of issues to be addressed in a final agreement is attached as Attachment 9.
 The operating agreement for a limit liability company is analogous to the articles of incorporation and bylaws for a corporation.