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Exclusive: Tiny island sues to take control of lucrative .nu

Kevin Murphy, November 28, 2018, Domain Registries

The tiny Pacific island of Niue has sued the Swedish ccTLD registry to gain control of its own ccTLD, .nu, DI has learned.

The lawsuit, filed this week in Stockholm, claims that the Internet Foundation In Sweden (IIS) acted illegally when it essentially took control of .nu in 2013, paying its American owner millions of dollars a year for the privilege.

Niue wants the whole ccTLD registry transferred to its control at IIS’s expense, along with all the profits IIS has made from .nu since 2013 — many millions of dollars.

It also plans to file a lawsuit in Niue, and to formally request a redelegation from IANA.

While .nu is the code assigned to Niue, it has always been marketed in northern Europe, particularly Sweden, in countries where the string means “now”.

It currently has just shy of 400,000 domains under management, according to IIS’s web site, having seen a 50,000-name slump just a couple weeks ago.

It was expected to be worth a additional roughly $5 million a year for the registry’s top line, according to IIS documents dated 2012, a time when it only had about 240,000 domains.

For comparison, Niue’s entire GDP has been estimated at a mere $10 million, according to the CIA World Factbook. The island has about 1,800 inhabitants and relies heavily on tourism and handouts from New Zealand.

According to documents detailing its 2013 takeover, IIS agreed to pay a minimum of $14.7 million over 15 years for the right to run the ccTLD, with a potential few million more in performance-related bonuses.

The Niue end of the lawsuit is being handled by Par Brumark, a Swedish national living in Denmark, who has been appointed by the Niuean government to act on its behalf on ICANN’s Governmental Advisory Committee, where he is currently a vice-chair.

Brumark told DI that IIS acted illegally when it took over .nu from previous registry, Massachusetts-based WorldNames, which had been running the ccTLD without the consent of Niue’s government since 1997.

The deal was characterized by WorldNames in 2013 as a back-end deal, with IIS taking over administrative and technical operations.

But IIS documents from 2012 reveal that it is actually more like a licensing deal, with IIS paying WorldNames the aforementioned minimum of $14.7 million over 15 years for the rights to manage, and profit from, the TLD.

The crux of the lawsuit appears to be the question of whether .nu can be considered a “Swedish national domain”.

IIS is a “foundation”, which under Swedish law has to stick to the purpose outlined in its founding charter.

That charter says, per IIS’s own translation, that the IIS “must particularly promote the development of the handling of domain names under the top-level domain .se and other national domains pertaining to Sweden.”

Brumark believes that .nu is not a national domain pertaining to Sweden, because it’s Niue’s national ccTLD.

One of his strongest pieces of evidence is that the Swedish telecoms regulator, PTS, refuses to regulate .nu because it’s not Swedish. PTS is expected to be called as a witness.

But documents show that the Stockholm County Administrative Board, which regulates Foundations, gave permission in 2012 for IIS to run “additional top-level domains”.

Via Google Translate, the Board said: “The County Administrative Board finds that the Foundation’s proposed management measures to administer, managing and running additional top-level domains is acceptable.”

Brumark thinks this opinion was only supposed to apply to geographic gTLDs such as .stockholm, and not to ccTLD strings assigned by ISO to other nations.

The Stockholm Board did not mention .nu or make a distinction between ccTLD and gTLDs in its letter to IIS, but the letter was in response to a statement from an IIS lawyer that .nu, with 70% of its registrations in Sweden, could be considered a Swedish national domain under the IIS charter.

Brumark points to public statements made by IIS CEO Danny Aerts to the effect that IIS is limited to Swedish national domains. Here, for example, he says that IIS could not run .wales.

IIS did not respond to my requests for comment by close of business in Sweden today.

Niue claims that if .nu isn’t Swedish, IIS has no rights under its founding charter to run it, and that it should be transferred to a Niuean entity, the Niue Information Technology Committee.

That’s a governmental entity created by an act of the local parliament 18 years ago, when Niue first started its campaign to get control of .nu.

The history of .nu is a controversial one, previously characterized as “colonialism” by some.

The ccTLD was claimed by Boston-based WorldNames founder Bill Semich and an American resident of the island, in 1997. That’s pre-ICANN, when the IANA database was still being managed by Jon Postel.

At the time, governments had basically no say in how their ccTLDs were delegated. It’s not even clear if Niue was aware its TLD had gone live at the time.

The official sponsor of .nu, according to the IANA record, is the IUSN Foundation, which is controlled by WorldNames.

Under ICANN/IANA policy, the consent of the incumbent sponsor is required in order for a redelegation to occur, and WorldNames has been understandably reluctant to give up its cash cow, despite Niue trying to take control for the better part of two decades.

The 2000 act of parliament declared that NITC was the only true sponsor for .nu, but even Niuean law has so far not proved persuasive.

So the lawsuit against IIS is huge twist in the tale.

If Niue were to win, IIS would presumably be obliged to hand over all of its registry and customer data to Niue’s choice of back-end provider.

Both Afilias and Danish registrar One.com have previously expressed an interest in running .nu, providing a share of the revenue to Niue, according to court documents.

Brumark said that a settlement might also be possible, but that it would be very costly to IIS.

Readers might also be interested in my 2011 article about Niue, which was once widely referred to as the “WiFi Nation”.

Niue: the myth of the “Wifi Nation”

Kevin Murphy, April 22, 2011, Domain Policy

The tiny Pacific island of Niue is commonly referred to as the world’s first and only “Wifi Nation”.

There was a lot of feel-good press coverage back in 2003, when the Massachusetts-based manager of the .nu country-code top-level domain started deploying wireless internet on the island.

NU Domain said at the time that it was “building the world’s first nation-wide wifi Internet access service, all at no cost to the public or the local government” (pdf)

This led to major media outlets, such as the BBC, reporting the line: “The free wi-fi link will be accessible to all of Niue’s 2,000 residents as well as tourists and business travellers.”

This story has remained in the media consciousness to this date, encouraged by the registry.

Just this week, NU Domain’s charitable front operation, the IUSN Foundation, was fluffily claiming that it has provided Niue with “the world’s only nation-wide free Internet”.

Even ICANN’s Kiwi chairman, Peter Dengate Thrush, spread the meme during a recent interview (audio), saying Niue had “installed free wifi across the entire island”.

There is just one problem with the “Wifi Nation” story: it’s bollocks.

This is what Niue’s Premier, Toke Talagi, had to say to Australian radio (audio) this week:

The internet services are unreliable, they’re not available throughout the island, and if you do want internet services connected up to your home you have to pay for it. Some people as I understand it have been paying up to $3,000 [$2,400] just for the installation of the wifi.

We’re never quite certain about what that “free” internet services is about, because we’ve had to pay.

According to Talagi, the wifi network provided by IUSN does not cover every village on the island, and users have to pay for it. The free wifi nation is neither free nor nationwide.

Even IUSN, while continuing to make its claims about nationwide wifi, admitted a year ago, seven years after the “wifi nation” claims were first made, that “villagers have been waiting to get online for some time”.

According to Talagi, the lack of reliable internet access is such a big problem that the Niuean government has had to take matters into its own hands and build its own ISP.

It is close to completing its own wired and wireless internet infrastructure, at the cost of $4.8 million, according to reports.

Niue discussed its needs with IUSN in 2009 and 2010, Talagi said, but “they felt they didn’t need to discuss these particular matters, that the services they were providing for us were adequate”.

It appears that IUSN doesn’t even pay to maintain its own equipment. This quote comes from a locally produced newsletter dated April 2009:

While IUSN is committed to provide free internet for its residents it is up to the users of this service to look after and maintain the internet enabling facilities.

That came from a report about residents of one of the island’s villages holding a fund-raiser in order to collect the $2,400 required to fix a wifi mast that had been damaged in a lightning storm (a common problem).

The per capita GDP of Niue, incidentally, is $5,800. Its citizens are not starving, but by the measure of its estimated GDP, about $10 million, it’s one of the poorest nations on the planet, reliant heavily on aid from nearby New Zealand.

According to Talagi and other sources, good internet access is not only required for economic reasons such as boosting the tourism industry.

Fast, reliable connectivity would also enable important human services, such as remote video diagnoses to be performed by overseas medical specialists, which the island lacks.

Niue’s ongoing economic problems come about largely because, other than fishing, it has very few natural resources to exploit.

A notable industry in the past has been the export of postage stamps to overseas collectors.

That business made headlines recently when a stamp was issued, celebrating the marriage of Prince William to Kate Middleton, which featured a perforation separating bride and groom.

There’s also talk of setting up a casino on the island, to boost revenues.

One asset it does have, at least on paper, is its top-level domain, .nu, which has proven popular in Sweden, where the word “nu” means “now”.

However, other than the lackluster internet connectivity provided by IUSN, Niue apparently does not see any significant revenue from the sale of .nu domain names.

According to IANA records, the .nu domain is officially delegated to the IUSN Foundation, previously known as the Internet Users Society – Niue.

The technical back-end provider is WorldNames Inc, which also operates as a registry/registrar under the brand NU Domain.

IUSN’s contact address is a PO Box in Niue, probably due to the fact that all ccTLD registry operators have to be based in the country they purport to represent.

The IUSN’s domain name, iusn.org, is registered to the same address as WorldNames and NU Domain, in the leafy Boston suburb of Medford, MA.

Most of the company’s business is done in Sweden, where most of its staff are based.

WorldNames has been in control of .nu since 1997, when its founder, Bill Semich, in partnership with a American ex-pat living on the island, managed to acquire the IANA delegation, pre-ICANN.

By several accounts, Niue has been trying to reclaim .nu from Semich for almost as many years.

In 2003, the government hired an American lawyer, Gerald McClurg, to be its representative on ICANN’s Governmental Advisory Committee and attempt to secure a redelegation.

That same year, McClurg made a submission to the International Telecommunications Union (.doc), in which he alleged that the nation was tricked out of its domain:

In 1997 IANA, without the approval of the Niuean Government, delegated the ccTLD for Niue to a businessman, William Semich, who lives in the United States. The advisor to the Government at that time was an ex-peace corp volunteer named Richard Saint Clair. Mr Saint Clair told the Government that the name meant nothing, that it was of no value or significance, and there was nothing that could be done. Shortly thereafter, Mr. Saint Clair then left his post as advisor and joined with Mr Semich in his organization – IUSN. The Government of Niue has been working every since to regain its ccTLD.

The Niuean government has actually passed a law, the Communications Amendment Act 2000, which states: “.nu is a National resource for which the prime authority is the Government of Niue”.

It also established the Niue Information Technology Committee, which “shall be the only designated Registry Manager of the Niue ccTLD .nu.”

Yet, eleven years on, IUSN is still the registry manager for .nu.

Talagi said in his radio interview this week that Niue was preparing to submit a redelegation request to ICANN/IANA in February last year, which is in line with what I was hearing at the time.

I have in my possession documentation from a European domain name registrar, dated March 2010, offering to take over the management of .nu on a not-for-profit basis.

It’s not clear to me whether Niue’s redelegation request is still active. Under current IANA practices, ICANN does not discuss pending ccTLD redelegation requests.

But I suspect IUSN has little interest in handing .nu back to Niue.

While registration data is not easy to come by, the number that has been reported frequently over the years, and as recently as 2008, is 200,000.

At 30 euros ($44) per year for the standard service from NU Domain, that’s close to a $9 million business just from domain registration fees.

That may not be much on the grand scheme of things, but it would certainly be material to a nation so reliant on hand-outs as Niue.

But IUSN is very protective of its asset.

Take a look at the Accountability Framework – one of the methods by which ICANN establishes formal relationships with ccTLD managers – that IUSN and ICANN signed in 2008 (pdf).

ICANN has signed 26 Accountability Frameworks over the last five years. They’re all very similarly worded, but the one it signed with IUSN has a notable addition not found in any of the others.

All ccTLDs’ Accountability Frameworks call for the TLD to be managed “in a manner that is consistent with the relevant laws of [insert country name]”.

But the .nu agreement is the only one to also make a specific reference to RFC 1591 and ICP-1, two rules dating from the 1990s that govern how ccTLDs are redelegated from one organization to another.

While ICP-1 gives governments a significant voice in redelegation requests, both documents state that IANA should only redelegate a TLD when both the winning and losing parties agree to the transfer.

The only notable exception to the rule is when the incumbent registry manager has been found to have “substantially misbehaved”, which I understand to be quite a high bar.

With that in mind, it’s far from obvious whether Niue stands any chance of getting its ccTLD redelegated to an approved registry any time soon.

According to a recent report (pdf) from ICANN’s ccNSO, IANA has redelegated ccTLDs in cases where the losing registry fought the decision, but its procedures for doing so are utterly opaque.