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WEBSHOP: Who owns .CX?

WEBSHOP: Who owns .CX?

Paying $10 an hour to surf the Web is an epidemic in third-world countries, according to mainland Australians. But, for the 1500 residents of Christmas Island, 2600 kilometres off the north western coast of Western Australia, it's a frustrating reality.

The remote geography of this offshore Australian territory, which is closer to Indonesia than its motherland, severely disadvantages it in terms of communications. While mainland city dwellers bemoan the snail-paced rollout of broadband, the pricey 64Kb link Christmas Island leases from Telstra will be its only access for some time.

What's more, the territory's efforts to set up a non-profit company, Dot CX, to launch Christmas Island's country code (.cx) onto the world market and subsidise Internet access for the community is being blocked by none other than the Australian Federal Government.

Dot CX and Australia's National Office for the Information Economy (NOIE) have been locked in a stand-off for more than a year over the wording of a letter the Government wants signed before it will endorse Dot CX as a trustee of the .cx domain. The letter waives all Dot CX rights to appeal any future decisions the Government might make regarding the registry. The company says it's unnecessary strong-arming, and already amply covered by the Telecommunications Act and company laws. The Government says it's policy.

Resource for sale

Two years ago, inspired by the example of its neighbours, Cocos Islands (.cc) and Tuvalu (.tv) which reap multimillion dollar revenues from the sale of their domains, the Christmas Island community set out to mimic their success. The sale of Cocos' .cc has won a steady stream of community grants, free Internet access and a new digital mobile phone system for the island. Meanwhile, Christmas Island is plagued by a brain-drain with youth forced to Perth to pursue schooling past year 10.

Dot CX enlisted the help of Garth Miller, who heads up .cc sales on behalf of Seattle-based firm, eNIC. Together they took over the .cx rights from UK-based firm, Planet Three, and developed a business model they felt would appease the conservative scrutiny of the Australian Government.

"To be honest, the Government has never liked the idea of a registry aggressively promoting or marketing a domain name; it makes them uncomfortable," says Miller. "The idea of ‘exporting' - inviting people from outside of the relevant community to register - some people view as inappropriate, whereas we see it as a resource the community can utilise."

Because the model had to be watered down, Miller says it is not nearly as commercially viable as the .cc business. Dot CX will license the .cx code to resellers rather than market it directly to consumers. The wholesale cost of the .cx domain operates on a sliding scale. Resellers pay Dot CX anywhere from $US9.00 to $US1.50 per domain name sold, depending on the number of sales made. In addition, .cx resellers pay a $US6.00 registry fee which covers the technical running of the registry (similar to a .com fee). All revenues are re-routed to the Christmas Island community.

However, when Dot CX contacted the Internet Corporation for Assigned Names and Numbers (ICANN) to change server and administrative contact details, it was told the registry was not endorsed by the Australian Government. NOIE, acting on behalf of the Commonwealth, requested ICANN block the switch. Adhering to its policy to take a country's government's wishes into consideration, ICANN agreed. Its decision is unlikely to be reversed until Dot CX signs NOIE's letter.

Marketing hindrance

Unlike Tuvalu, whose .tv prefix has happily adapted itself to worldwide commercial ventures converting into a $US50 million revenue stream over the next 10 years, .cx does not enjoy the same scope. Even so, Dot CX has generated $25,000 revenue within one month of reopening in January this year.

Its sole reseller, Christmas Island Technology Corporation (CITC), a start-up backed by the powerful Union of Christmas Island Workers (UCIW) has set up an office in Sydney with hopes to sell the domain to overseas buyers. "The idea is to have multiple registrars, but because of all the legal issues other registrars are reticent to enter into an agreement with [Dot CX]," says Miller.

This has severely retarded the marketing of .cx while squashing any opportunities for resellers to make margins on the sale. The sellers of .cx are able to charge "whatever the market will bear" for the country code, so anything they make on top of the wholesale price is clear profit.

Domain name firm Melbourne IT charges $60 to $70 per year for a .com.au licence, while .tv sells approximately 1000 domains a day for $50-100 each. Though it's unlikely .cx will reach the same price-point, the skill is seeking out markets, regions, even cities that share a similar prefix which identifies them as potential customers.

The Cocos Islands has 400,000 registrations via its aggressive marketing campaign, as opposed to Christmas Island's 7500 to 12,000. Both registries were opened in 1997. In the two years that the .cx registry has been frozen, Cocos has brought in $US2 billion revenue through the sale of .cc domains.

Dot CX chairman Alan Fealy says no obvious niche has been established for .cx, although the company has considered church groups. Sex sites, identified as a target early on in the piece, have been banned in the public interest. This ruling is written into the Dot CX constitution.

Miller fears that having faltered at the starting line, Dot CX will never catch up in terms of revenue. "Basically the dot-com frenzy is over and the window of opportunity for the Christmas Island community was lost. With increasing competition in dot-coms and the introduction of new domain names, those days will never be back," he says.

Bob Mears, managing director of The .tv Corporation (Asia) disagrees, saying domain names are moving towards increased variety. "ICANN has just approved an additional seven top-level domains including .info and .pro," he says. "The Internet is a worldwide medium and in a market that big there has to be someone who wants .cx."

Meanwhile, Mears warns that marketing is only half the challenge. "It costs millions to manage a woldwide domain name in terms of infrastructure. We have 50 servers globally to make .tv sites load as fast or faster than .com, but this requires a hefty investment," he explains.

According to ICANN policy, all that is required to transfer registration rights is a letter from Dot CX and Planet Three agreeing to the arrangement. The Government's interjection stems from an escalating apprehension about Internet regulation, according to Miller. "No powerhouse is truly overjoyed about a ‘free' medium that offers even a remote opportunity to upset the status quo," he says.

Chris Disspain, CEO of the .au domain administration (auDA) who signed a similar letter from NOIE, says the commercial aspect of the .cx model is most likely the cause for concern. However, he doesn't see Dot CX's problem with signing the contract.

Who's got the power?

Meanwhile, the Christmas Island Shire, the territory's internal council, is challenging the Australian Government's right to control the fate of the .cx code. It has written to ICANN asserting that the Shire - not the Commonwealth - is the relevant governing body whose consent should be sought.

The friction is bred from Christmas Islands' turbulent political relationship with mainland Australia. In a banal association, it classifies as an external territory run by the Department of Transport and Regional Services whose minister, Ian McDonald, resides in Queensland. For practical reasons, McDonald contracts the Western Australian State government to provide services, such as medical and educational facilities to the island. However, Christmas Islanders don't vote in WA elections, allowing them no impact on the policies of the State. Christmas Islanders are allowed to vote in Northern Territory elections, a State with which it has no dealings.

"Our only avenue of appeal is to vote out a minister who is situated in Queensland," says Fealy. "That's why the wording of the letter causes such concern, because everyday there are people making decisions about Christmas Island who have never been there and live 10,000 miles away."

Also underlying the impasse is the danger the Commonwealth is using Dot CX as a soft target to set a precedent of regulation through interference. Tony Hill, executive director of the Internet Society of Australia admits it has sought traction and in the past by altering the Telecommunications Act.

ICANN is also struggling to comprehend its role in the domain food chain. Hill says many people are keen to get away from the US-centric concept of the Internet, and ICANN's roots in the US Department of Commerce are a little too fresh and lean too heavily towards gatekeeping.

The consensus coming out of the worldwide ICANN meeting in March is that the Australian Goverment is overstepping its boundaries. But, how ICANN chooses to deal with this issue in practice remains to be seen.


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