The perilous state of the UK's internet space has been exposed once again, as the second largest seller of .uk domain names admitted last night it wrongly sold dozens of valuable internet addresses.
Eagle-eyed dot-UK registry watchers noticed unexpected changes in ownership of various .uk names over the weekend – including sunset.uk, waterfall.uk, pad.uk and trending.uk: all of which were sold by Fasthosts to one or more industry insiders rather than going through the proper public process.
The domain names were supposed to expire and drop onto the open market, after which all domain-name traders could compete to catch the addresses and resell them later on. Instead, though, Fasthosts allowed at least one of its customers to renew and obtain the domain names on the day of their expiry, just before they were due to drop.
That meant certain folk had a mile-long head start snapping up valuable domains before the rest of the industry could have a fair crack at acquiring the dot-uk addresses. We dived into the world of catching expired .uk domains here if you want to know more about how it works.
Fasthosts said the sales were "a mistake," with its head of sales and marketing Michelle Stark telling The Register on Wednesday that 38 expiring domains had been renewed and shifted before they publicly dropped in a "one-off online transaction" due to "human error."
According to Stark, Fasthosts received a load of queries from people trying to nab the most valuable .uk names that the company had held onto for years – nominally to "protect" said domains on behalf of the owners of the corresponding .co.uk addresses – and one of those transfer requests was wrongly processed. She insisted there were “no loopholes” in the system. The sales have since been cancelled, and the money refunded, she told us.
But this is not the first mistake the UK’s largest registrars – looking at you, 123-Reg and NamesCo – have made with respect to pushing .uk names. Last year, we reported how owners of .co.uk domain names were invoiced for their .uk equivalent, even though they had never asked for the names and didn’t want them: the registrars had simply added the .uk domains to their accounts without asking or informing them, and demanded renewal fees.
Where is the regulator?
Following yet more dubious financial transactions, you might think the organisation that oversees the .uk registry and sets the rules, Nominet, would be all over the issue. But in what is just the latest sign of a regulator gone AWOL, Nominet intends to do nothing about it.
“An error in Fasthost’s automated systems led to a small number of domains at the very end of the expiry period being renewed without the registrant's consent and the admin contacts changed,” Nominet told us in a statement. “We have intervened to ensure that any domains which have also been transferred to different registrars are reinstated to the correct registrant. Fasthosts have reversed the remainder this morning.”
But Nominet failed to respond to our queries about whether it would carry out an investigation into what happened, or whether it considered the sales a breach of its code of conduct.
In fact, despite several years of complaints about sharp practices in the UK domain market, Nominet has not to our knowledge carried out any probes, and has repeatedly failed to state the last time its board’s code of conduct committee has even met. That committee is where any issues of malpractice by UK registrars would be reviewed, and under the company’s own corporate rules, the panel is required to meet “at least once a year.”
But there is no evidence that the committee has in fact ever met, with its dedicated webpage nothing but a PDF of its terms of reference from 2015. There are no meetings or minutes, and the committee isn’t mentioned in Nominet’s annual report, released this month.
It gets worse
To make matters worse, the .uk names that were wrongly sold this week were already the subject of controversy due to both Fasthosts and Nominet misleading domain holders by contacting their owners to encourage them to renew the names and implying they were the .co.uk domains they had purchased, rather than .uk ones that had been added to their account without their knowledge.
Despite the outcry, Nominet has been silent even on its own internal forum. One person who bagged one of the erroneously transferred .uk domain names is even standing for Nominet’s board in an election due to start next week. That particular domain name, charlie.uk, which was assigned to Leon Hughes, who owns charlie.co.uk, was ultimately transferred to Susannah Clark.
Hughes said he did not authorize the sale. In response, Clark wrote on popular industry notice board Acorn Domains to deny any wrongdoing: “Guys, you do not know the facts, and Nominet and Fasthosts do. Totally. Everything is documented (thank goodness). I am completely secure about things, and indeed Fasthosts have conceded that… If Nominet thought I had acted wrong they wouldn't let me be elected I assure you.”
"The whole system needs review," she added. "It's all I'm saying and you have to think what you will."
The 38 domain names in question were among the most valuable amid a massive one-million .uk domain drop this month. Last week, Nominet reported in its annual report it had 11.8 million .uk domains under management. As of today that stands at 10.9m; a 7.6 per cent plunge.
That fall is because of a policy decision made by Nominet in 2013 as a way to push through its desire to create a galaxy of second-level domains than end in just .uk, like batteryhorsestaple.uk, as opposed to third-level domains Brits are familiar with, like riscos.org.uk.
Nominet convinced itself that second-level names were essential to compete with a growing global market in domain names. Industry insiders were not convinced, with more than 70 per cent of Nominet members saying they were opposed to the idea. But Nominet pushed ahead regardless, getting the necessary votes to OK the project by telling registrars it would protect all .uk names for five years by allowing the owners of .co.uk addresses to register their corresponding dot-uk domains at any time.
Nominet then spent years and millions of pounds marketing the .uk name in the hope of persuading the British public and businesses to purchase both a co.uk and the .uk: a campaign that failed. Of the top 10 British brands, not a single one uses their .uk name and most don’t even own it.
That compromise has compromised Nominet for the past six years, as registrars have played fast-and-loose with the rules, and relied on Nominet not to act. It hasn’t even when it has received complaints from ordinary netizens. And now those unwanted .uk domains are expiring in their millions.
It is no coincidence either that the worst offenders in this game are also the largest registrars. Under Nominet’s unusual voting system, the more domains a company has registered, the more votes they get to cast in decisions. The largest three registrars in the UK, by far, are 123-Reg (ultimately owned by the world’s largest registrar GoDaddy), Fasthosts (owned by German giant United Internet and a subsidiary of 1&1 Ionos), and NamesCo.
While the average UK registrar has around 5,000 votes to cast within Nominet’s system, 123-Reg/GoDaddy has 3.6 million; Fasthosts/1&1 has 1.7 million and NamesCo 615,000. That influence even extends to the Nominet board, with representatives from the very largest registrars repeatedly elected.
All about the green
Perversely, in the past, Nominet has actively campaigned against candidates that raised the issue of industry capture.
Even as Nominet fails to safeguard the UK's internet registry, it is increasingly reliant on the money that monopoly generates. Under its CEO Russell Haworth, a former acquisitions specialist, Nominet has attempted to rebrand itself as a "non-profit with a purpose" organisation instead of what it is: a non-profit member-based organisation established for the public benefit.
Nominet's latest financial results show that despite record revenues from the .uk registry, thanks to Nominet raising prices, the company has again reported lower earnings thanks to efforts to break into commercial markets that have repeatedly failed.
In its annual report [PDF], Nominet made a single reference to it exiting the spectrum management market – something it had spent years and millions of pounds trying to enter – and the accounts appear to show a "loan" of £4.1m from the UK registry to Nominet's other faltering businesses.
At the same time, director and executive compensation is at a record high, and CEO Haworth was awarded a 30 per cent pay rise last year to £593,000. ®