Exclusive Ministers led by Peter Mandelson are considering a power grab at the independent company at the centre of UK's internet infrastructure, The Register can reveal.
Mandelson's Department for Business, Enterprise and Regulatory Reform (BERR) has asked Nominet, which is in charge of the .co.uk registry, to justify its independence from Whitehall.
In a letter dated October 15, senior civil servant David Hendon, BERR's Director of Business Relations, asked Nominet chairman Bob Gilbert: "What arguments would you employ to convince my Ministers that the present relationship between government and the company is appropriate in ensuring that public policy objectives in relation to the management of the domain name system and the standing of the UK in the internet community are understood and taken into account?"
The letter followed a meeting on September 8, when BERR said it was worried about Nominet's constitution. It puts key decisions to vote by the non-profit's domain industry membership. Hendon wrote: "At the conclusion of our meeting I was left with unresolved concerns about how Nominet's constitution and structure addressed its responsibility to stakeholders other than its membership."
As well as day-to-day running of the .co.uk registry, Nominet represents the UK at ICANN meetings. The US organisation exercises overall control over the internet's naming systems, and so has a very significant role in policy and development debates in which governments demand a voice.
Nominet also coordinates the UK's presence at the UN's Internet Governance Forum, an annual discussion of internet policy independent of ICANN.
In response to BERR's letter, Nominet today announced it will conduct an "independent corporate governance review", as suggested by Hendon. Gilbert said: "We've been actively looking to enhance corporate governance in line with best practice for some time now. Our recent discussions with BERR have bought this desire to the fore once more and we feel that a rigorous, independent review will help us to achieve compliance with best practice efficiently and effectively."
In a telephone interview, Gilbert told The Register he hoped the review will be completed by Christmas. It will be conducted by an individual independent of Nominet and "someone very well respected by BERR", but yet to be decided.
The issue of how Nominet should be run has long been a cause of divisions between its leaders and members. At this year's AGM in May, the executive proposed "special resolution 6" for new powers that would let it appoint two extra board members without member approval. The proposal failed to win the 75 per cent of votes required to change Nominet's constitution.
Critics of the executive argued special resolution 6 would grant it autocratic control of the board by outnumbering the member-elected seats. Chief executive Lesley Cowley said the measure was necessary as control of Nominet was "vulnerable to capture" by so-called domainers, who buy and sell web addresses for profit, and who Cowley said would not act in the interests of the wider UK internet.
Following the vote, the Nominet executive promised its structure would remain under review. Sources familiar with debates over Nominet's structure, on both sides, suggested BERR's letter shows that the government would consider appointing people to unelected seats.
Any government involvement in Nominet affairs would mean wholesale reconstruction of the basis the company trades upon. "It would require a complete rewriting of the constitution, or legislation," Gilbert said.
One Nominet member, who asked not to be named, said: "They're saying this in such a way that 90 per cent of the members will take a glance and not realise what is going on. What concerns me is that the government has shown itself not competent to run the economy - what will happen if we put them in charge of DNS?"
Gilbert said Nominet's executive takes no position on whether it would want the government to take control. While conceding that the government now considers Nominet a critical part of national infrastructure, he said: "We would wish Nominet to continue as a members' organisation."
Although Hendon is not specific in the letter about how BERR could increase its sway over Nominet, the intention is clear. He wrote: "The domain system is, of course, a crucial element in the internet economy. In this context I noted that many countries regarded their country code as a national asset, the management of which required the direct involvement of government."
A BERR spokeswoman said: "All I can say at the moment is we have no plans." She described the letter as a "fact-finding" exercise, adding that Nominet's interpretation that it could lead to a complete restructuring "is a matter for Nominet".
Also at May's AGM, Jim Davies, a domain lawyer whose election the executive had campaigned against, was elected to Nominet's board. In its press release today, the non-profit appeared to allude to boardroom struggles caused by the appointment when it referred to "governance issues", "which include conflicts of interest, [and] demand immediate and proactive action".
Bob Gilbert said the allusion referred to complaints about "a board member" but refused to discuss his or her identity as it was "subject to a process yet to be completed". Jim Davies did not return a call requesting comment.
We're hosting a copy of the BERR letter here (pdf). ®
While refusing to discuss its dispute with Jim Davies with us, Nominet has posted details here (pdf).