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Governments continue to go barmy over .com namesakes

South Africa back in the ring, New Zealand ready for more mistakes

It seems there will be no let-up in governments going barmy and wasting huge sums of taxpayers money on purchasing their countries' global domain names.

According to various South African news sources, the government is either agreeing to or has agreed a price for from Virtual Countries - the company that sold to the New Zealand government for US$500,000 in December 2002.

In both cases, the governments have attempted to steal the domain away from Virtual Countries and have failed.

The fact that the New Zealand government paid an incredible US$500,000 for their domain only came out last week when MP Rodney Hide got some answers to some difficult parliamentary questions. He has asked many more including financial justification for spending so much on just a domain.

However, if reports are to be believed, the South African government is looking to pay even more. Virtual Countries had apparently asked for between US$5 million and US$10 million for two years ago and was turned down.

Up pops Envir Fraser

Now, one Envir Fraser - the senior e-commerce manager at the Department of Communications at the South African government - is telling journalists they are going to buy the domain off Virtual Countries but won't say for how much in case it "undermines negotiations". He says there is "no truth" in rumours the government will pay between US$10 million and US$15 million (figures that do look suspiciously made up by the media).

Intriguingly, Mr Fraser also refers to the new WIPO rules that seek to give countries rights over their country-name domains but claims they don't apply in South Africa's case because (he told "the report is not retrospective and therefore countries which have already had their names registered are forced to negotiate to acquire them back".

All Mr Fraser's statements suggest rather strongly to us that the South African government is using the New Zealand case to pressure Virtual Countries for a sale of for US$500,000 or so.

We have left a message for Mr Fraser but have not yet heard back from him. However, we suspect that he, as well the founder and CEO of Virtual Countries Mr Gregory Paley (also currently unavailable) are aware that the new WIPO rules are far more ambiguous than that.

There is no agreement that handing power of country-named domains will or will not be retrospective. In fact, we think it will be retrospective as there seems little reason for the controversial measure otherwise.

Instead, Mr Fraser is more likely to be worried over clause 316 which says the domain would likely not be handed over if the current owner had "evidence of company name registration (if applicable), evidence of use and established reputation in a particular field of business, use of the domain name in a same or similar field of interest to the trade name, and whether the trade name had acquired secondary meaning" - all of these apply to Virtual Countries.

All on one die

That is not to say Virtual Countries is home free. WIPO has a habit of making creative decisions around its own rules and handing domains over to rich and powerful complainants (who are the people that provide it with a rather nice sum of money each year).

So Virtual Countries - which also owns numerous other country domains including Algeria, Bangladesh, Belgium, Ecuador, Morocco, Nepal, Nicaragua, Scotland, Sweden and Turkey is on a knife-edge. If it loses one case over the new rules, every government will storm in and wipe out its business within months. Its very existence is in doubt. (Incidentally, is owned by newspaper Irish Times; by US company Krystal Technologies; by Pete Degroot in Ontario; and by a US telecoms company.)

Faced with that dilemma, Mr Paley might just think US$500,000 is better than nothing. The South Africa government on the other hand wants the domain and can point to and its previous much higher offer as an example of it pulling off a great deal. An arbitration case for it may risk it never getting hold the domain.

Mr Paley will not go poor since he owns a rack of other domains including,,,,, and

Justification needed

But what about these extraordinary sums being paid out. Can or really be worth so much money to the governments? Admittedly, it is peanuts to a government but then so is the construction of new hospitals, houses, schools, raising minimum wages, increasing single mother's allowance etc etc. It needs to be justified.

In New Zealand anyway, Rodney Hide is planning to force that justification. The government may just have spent NZ$18,734.54 on getting hold of on a WIPO decision forced through by unjustifiable trademark applications that later earned it the moniker "reverse domain hijacker", but what have taxpayers got for it? Have a look yourself -

The NZ government also has a trademark for "BizInfo" and its trademark applications for "BizNet" have been accepted and are going through the system. Do you notice anything peculiar here?

Mr Hide does. In fact he has now asked: "What consideration or effort, if any, has been put into securing the domain name" and "What consideration or effort, if any, has been put into securing the domain name"

Which fit nicely along: "What is the return expected from owning the domain name and how is that return to be generated?" and numerous other questions that are due to be answered very soon.

It seem that while everyone else has realised the value of the Internet and domains, governments still seem to think we're in the dotcom boom. ®

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