Neustar still seems set to lose a critical US government contract that provides half of its annual revenue.
The Federal Communications Commission voted unanimously last week to begin talks with rival contract bidder Telcordia, saying it will save the US consumer hundreds of millions of dollars a year.
Since 1997, Neustar has administered the telephone number portability system in the US. It’s not related to domain names.
Neustar, which also runs .us, .biz and .co, made $474.8 million from the deal in 2014, 49% of its annual revenue.
Commissioner Ajit Pai said in a statement:
Should we now declare Telcordia the next local number portability administrator? When you compare the numbers, the answer is clear. Last year, the current contract cost about $460 million. In contrast, Telcordia bid less than $1 billion for a seven-year term — that’s less than $143 million per year. That’s substantial savings for the American public.
Neustar told Bloomberg that the ruling was “procedurally defective” and that the company is “considering all options to address the significant flaws.”
Some kind of legal action to attempt to block the negotiations seems possible.
The company has also initiated a share buy-back to prop up its stock in light of the bad news.
Neustar has been devastated by the news that it is likely to lose a US government contract that provides almost half of its annual revenue.
The US Federal Communications Commission yesterday recommended that Telcordia Technologies take over the Local Number Portability Administrator contract, which Neustar has held since 1997.
The service is basically North America’s centralized phone number registry. It’s not directly related to its domain name businesses.
In 2014, the deal was worth $474.8 million to Neustar, or 49% of its annual revenue.
On the news, the company’s share price fell off a cliff, losing almost 20% of its value before recovering slightly to end the day almost 12% down.
Neustar expressed dismay and anger in a press release, saying the FCC was putting the security of the US phone system at risk:
Although apparently the LNPA is used to port numbers, it is also critical for technology migrations, mergers and acquisitions, disaster recovery, accurate 911 location, and is the only authoritative database for the proper call completion of 11 billion voice calls and text messages each day. The recommendation misunderstands the operating system and would harm public safety, law enforcement, fundamentally burden small carriers, and disrupt service for 12 million consumers — all in pursuit of theoretical savings for a few carriers, which Neustar believes will be dwarfed by the costs and risks of transition.
Switching to Telcordia is currently only a recommendation that FCC commissioners must approve, and Neustar said it will “review all of its options”.
The LNPA deal is due to expire June 30 this year.
Neustar’s domain business — or “security services” as the company calls it — comprises DNS resolution, the registries for .us, .biz and .co, and the back-end registry for many new gTLDs. It brought in revenue of $140.3 million in 2014.
According to Reuters, Neustar is currently talking to advisers about the potential sale of the company, which is currently listed on the New York Stock Exchange, to private equity.
The potential buyers are reportedly waiting for the award of the number portability contract before sealing the deal.
Neustar’s top domain name guy is moving to UK new gTLD consultancy Valideus.
Jeff Neuman, who’s been with Neustar for over 15 years, will become Valideus’ senior vice president for North America, starting this coming Monday, according to Valideus managing director Nick Wood.
I don’t know who’s replacing him at Neustar, where he’s been in charge of the company’s domain name business for the last couple of years, overseeing the company’s business as a registry back-end provider and registry for New York’s .nyc new gTLD.
Neuman was previously Neustar’s longstanding VP of policy, a role which also saw him heavily involved in ICANN’s GNSO Council and Neustar’s application for and launch of .biz, back in 2000.
He’s been quite a pivotal and sometimes outspoken figure over the years.
Valideus is the new gTLD service provider sister company to Com Laude, the brand-focused registrar. It provides application consulting and ongoing registry/registrar management for dot-brand gTLD applicants and registries, Amazon among them.
I gather that Neuman will remain based in the US, as his new job title implies.
ICANN’s Governmental Advisory Committee does not plan to advise against the release of two-character domain names in new gTLDs.
In fact, judging by a GAC discussion at ICANN 51 in Los Angeles yesterday, the governments of many major nations are totally cool with the idea.
Under the standard Registry Agreement for new gTLD registries, all two-character domains (any combination of letters, numbers) must not be sold or activated in the DNS.
The blanket ban was designed to avoid clashes with two-letter ccTLD codes, both existing and future.
ICANN left the door open for registries to request the release of such names, however, and many companies have formally applied to do so via the Registry Services Evaluation Process.
Some registries want all two-character domains released, others have only asked for permission to sell those strings that do not match allocated ccTLDs.
There seems to have been an underlying assumption that governments may want to protect their geographic turf. That assumption may turn out to be untrue.
Representatives from the United States, Netherlands, Spain, Denmark, Australia, Austria and Iran all said yesterday that the GAC should not issue formal advice against the the two-character proposals.
No governments opposed that apparent consensus view.
“The use of the ‘US’ two-letter country code at the second level has not presented any technical or policy issues for the United States,” US rep Suzanne Radell said.
“We, in fact, do not require any approval for the use of US two-character country codes at the second level in existing gTLDs, and do not propose to require anything for new gTLDs,” she said.
She even highlighted domains such as us.com and us.org — which are marketed by UK-based CentralNic as alternatives to the .us ccTLD — as being just fine and dandy with the US government.
It seems likely that the GAC will instead suggest to ICANN that it is the responsibility of individual governments to challenge the registries’ requests via the RSEP process.
“What we see at the moment is that ICANN is putting these RSEP requests out for public comment and it would be open to any government to use that public comment period if they did feel in some instances that there was a concern,” Australian GACer Peter Nettlefold said.
I’ve not been able to find any government comments to the relevant RSEP requests.
For example, Neustar’s .neustar, which proposes the release of all two-character strings including country codes, has yet to receive a comment from a government.
Many comments in other RSEP fora appear to be from fellow dot-brand registries that want to use two-letter codes to represent the countries where they operate.
Corporate sponsors raised $250,000 to fund a $400,000 showbiz gala for ICANN 51 next month, but ICANN pulled the plug after deciding against making up the shortfall.
Sources tell DI that the lavish shindig was set to take place at Fox Studios in Los Angeles on October 15, but that ICANN reneged on a commitment to throw $150,000 into the pot.
Meanwhile, a senior ICANN source insists that there was no commitment and that a “misunderstanding” is to blame.
ICANN announced a week ago that its 51st public meeting would be the first in a while without a gala event. In a blog post, VP Christopher Mondini blamed a lack of sponsors and the large number of attendees, writing:
One change from past meetings is that there will not be an ICANN51 gala. Historically, the gala has been organized and supported by an outside sponsor. ICANN51 will not have such a sponsor, and therefore no gala. ICANN meetings have grown to around 3,000 attendees, and so have the challenges of finding a gala sponsor.
This explanation irked some of those involved in the aborted deal. They claim that the post was misleading.
Sources say that sponsors including Fox Studios, Neustar and MarkMonitor had contractually committed $250,000 to the event after ICANN promised to deliver the remaining $150,000.
But ICANN allegedly changed its mind about its own contribution and, the next day, published the Mondini post.
“The truth is there were sponsors, the truth is it wasn’t too big,” said a source who preferred not to be named. “There was enough money there for a gala.”
The venue was to be the Fox Studios backlot, which advertises itself as being able to handle receptions of up to 4,000 people — plenty of space for an ICANN gala.
I’ve confirmed with Neustar, operator of the .us ccTLD, that it had set aside $75,000 to partly sponsor the event.
But Mondini told DI that ICANN had not committed the $150,000, and that claims to the contrary were based on a “misunderstanding” — $150,000 was the amount ICANN spent on the Singapore gala (nominally sponsored by SGNIC), not how much it intended to spend on the LA event.
“There was no ICANN commitment to make up shortfall,” he said. “It was misheard as an ICANN commitment.”
More generally, ICANN’s top brass are of the opinion that “we shouldn’t be in the business of spending lots of money on galas”, Mondini added.
“ICANN paying for galas is the exception rather than the rule,” he said.
He added that he stood by his blog post, saying that a failure to find sponsors to cover the full $400,000 tab is in fact a failure to find sponsors.