Who's running this thing?
As for why Nominet has withdrawn from three of the four commercial markets it entered, the answer may lie in the three senior Nominet staff who also sit on its board. They are: CEO Haworth, CFO Ben Hill, and executive director Eleanor Bradley, who up until April 2019 was the COO and is now managing director of Nominet's registry and public benefit operations. The chief exec justifies the trio's high salaries by arguing they “attract and keep the best talent in an increasingly crowded and competitive marketplace."
Haworth is a mergers and acquisitions specialist who has spent most of his career in the financial sector. Hill also specializes in mergers and acquisitions with most of his career in the automotive industry. Bradley meanwhile has spent pretty much her entire career at Nominet.
These three staff, as well as company secretary Rory Kelly, are also the sole directors of an organization created last year called Nominet UK Holding Co Ltd; its purpose is unclear, another concern expressed by some members of PublicBenefit.uk. Meanwhile Bradley and Hill also sit on Nominet board’s investment committee, and Haworth and Hill sit on the board’s mergers and acquisitions committee.
In other words, the three staff-slash-board members that PublicBenefit.uk has said it wishes to remove from the board have been responsible for developing and driving Nominet’s commercial flops, and have been handsomely rewarded while doing so.
A member of staff with the necessary IT experience for what Nominet attempted to do was CTO Simon McCalla, who left Nominet at the start of 2019 and was never replaced.
Nominet shakes up system for expiring .uk domains, just happens to choose one that will make it £millions. AgainREAD MORE
Nominet has stumbled in every market it has entered, save one: cybersecurity. For that sector, it bought in the necessary expertise through acquisitions. Despite spending years and tens of millions of pounds on autonomous vehicles, white space spectrum management, and the internet of things – including opening an office in the United States – in September 2020, CEO Haworth announced Nominet was walking away from all three technology areas with little to show for it.
The decision merited a single paragraph in its annual report. “Moving forward, our commercial focus remains on registry solutions and cyber security,” it read. “In order to capitalise on the significant opportunities across the cyber and registry solutions markets, we decided to step back from our activities in spectrum management and autonomous vehicles where the paths to scale were less clear. We have open sourced our IoT tools to ensure that the wider technology community can continue to access and develop our technology.”
At his speech at Nominet’s AGM, Haworth spent more time talking about why he was shutting down Nominet’s members forum with immediate effect than he did explaining how he and the organisation had got it so wrong.
In truth, not many Nominet members had noticed nor cared about these failed efforts. So long as they were able to buy .uk domains at a discounted rate – the main benefit of becoming a member – the majority of them were too busy running their own businesses to think about what the registry operator was up to.
Even when Nominet killed off its charitable trust – through which it had passed excess revenue for a decade as part of its public benefit remit – and kept the £5m-6m a year in-house, paying out just £500,000 in the first year to good causes, members raised their eyebrows but did little. Much of that money likely went to propping up Nominet’s autonomous vehicle and spectrum management efforts; efforts that would be abandoned two years later. But since that money was already paid in, members moved on.
What was harder to ignore was the fact that despite these failures, Nominet’s management team was paying itself more money every year, often double-digit annual increases. In 2019, Haworth received a 30 per cent pay rise with his bonus almost as big as his salary: £299,000 in salary and £275,000 in bonuses. Hill received a £157,000 bonus on a salary of £215,000 and Bradley £103,000 in bonuses on a salary of £220,000.
Members now want all three of these staff taken off the board, and the new proposed caretaker directors have promised to end bonuses and the various other perks that have resulted in such executive pay.
Likewise the non-elected members of the board – chosen by the board itself rather than members – who have enabled Nominet to spend its members’ money while refusing to provide them with details, or answer questions, and who have stuck by failing businesses, approving measures to prop them up by pulling more money out of the core .uk registry, rather than stepping in and shutting them down. Members want them gone, too.
That would leave the two caretaker directors, four elected non-executive directors, and two appointed non-executive directors, effectively putting members back in charge through their representatives and so obliging Nominet to listen to its members rather than itself.
Where things finally fell down
It was Nominet’s focus on its commercial efforts, and its view of the .uk registry as a bank account rather than its core business, that finally led to the EGM through to a series of serious mistakes.
The first was when Nominet pushed for the creation of second-level domain names rather than sticking with its longstanding third-level approach ie: it wanted you to buy and use example.uk as well as example.co.uk.
The company argued that this was essential to keep the registry healthy and viable as more than a thousand new top-level domains – from .abogado to .zone – were added to the internet. But its members were far from convinced: what about all the people who own .co.uk domains, they asked? Will they now be expected to pay another £10 a year for the same name? What if they don’t and someone else grabs their name, it could cause an enormous headache for everyone.
Eventually Nominet struck a deal with members: it would allow those with .co.uk names to have the .uk version automatically and for free for a few years. Only then would people have to pay for them. The introduction would therefore be smooth, and Nominet and its domain-selling registrars would end up making more money from all these new names.
Except of course it didn’t play out like that. It turned out people were happy with their .co.uk and didn’t really want a .uk version as well. So registrars registered the names for them, adding them to their accounts – often without even asking them – and then periodically contacted them urging them to buy the name.
Some did but many more didn’t. And so when the free registration period was up, and Nominet started asking registrars to pay the annual per-domain fees, a number of those registrars took it upon themselves to bill their customers for those unwanted .uk domains or otherwise strong-arm them into renewing them.
This led to a furious outcry from those who noticed. In response, the registrars claimed it was all an innocent mistake and they would refund anyone wrongly charged. But a few months later, we caught them doing it all over again: billing customers for something they didn’t want and had never asked for. We approached Nominet and asked what it was going to do. Its response? Nothing at all.
But when millions of those .uk domains were due to expire, Nominet did act: it created an entirely new system to enable its registrars to get hold of the web addresses – rather than release them to the general public – and purposefully designed the system to favor its largest members.
Two years ago, 123-Reg and NamesCo decided to register millions of .uk domains for customers without asking them. They just got the renewal reminders...READ MORE
When smaller members complained, Nominet dismissed their concerns. When The Register wrote a story about it, CEO Haworth accused us of being “fake news.”
Things went from bad to worse. It became clear that organized groups were gaming Nominet’s system to get hold of valuable domains. But when members – again, the smaller ones – complained, Nominet again refused to do anything about it.
In June last year, as .uk holders were getting increasingly frustrated with their registrars pressuring them to register .uk names they didn’t want, Nominet crossed a line from impartial overseer to industry champion, sending millions of emails itself to those same individuals, warning that they were about to lose a domain they never asked for.
We again reported on the problem, quoting one reader who told us: “I had a mild panic until I realized that they were for .uk domains that I’ve never registered, rather than .co.uk ones I have. I’m not sure how [Nominet] can justifiably claim that a domain that was never registered in the first place can be 'due for renewal'; seems like a fairly desperate attempt to flog a dead horse. I’m used to getting promotional emails from Fasthosts, but not from Nominet."
Rules? What rules?
Then in September, Fasthosts, one of Nominet’s biggest members ,admitted it had wrongly sold dozens of valuable .uk domains to industry insiders rather than going through the proper public process.
Smaller members, again, were furious. Fasthosts quickly backtracked and claimed, again, that it was all an innocent mistake. Nominet was asked to investigate: it refused to do so. Again.
The entire .uk market appeared to be a free-for-all with the rules repeatedly trampled over and, when caught, large Nominet members claiming it was all a mistake. Nominet repeatedly took their word for it, took their money, and refused to investigate.
Then the management team again went looking for cash to squeeze out the .uk registry: this time deciding to overhaul the system for expiring domains. It released a policy paper in which it outlined various solutions, one of which was to put itself in charge of the entire process; an approach that would see it take the majority of the profits made from grabbing expiring names, again hurting its smaller members.
Nominet claimed it was merely a consultation. Incredibly, its policy paper came complete with scores alongside each suggested solution on what to do with expiring .uk domains. Which one got the highest score? The one in which Nominet takes charge of the entire process, of course.
Smaller members were, yet again, the ones who had the most to lose from this approach, and more than 100 of them signed a petition that insisted their organization not move ahead with the plan. At a meeting held to discuss the overhaul, Nominet’s head lawyer refused to accept the petition, arguing there was a formal mechanism for responding to the consultation – a mechanism that forced respondents to make a series of binary choices between the options that Nominet had put forward.
Done a number on us
And then, just days before Nominet’s annual general meeting in September, a member noticed a change in the organization’s voting figures and started asking questions.
It turned out Nominet had wrongly calculated members’ voting rights, wrongly awarding larger members a greater number of votes. But despite admitting its error, and with the question hanging over whether Nominet’s current board had even been elected correctly, Nominet refused to release the numbers, and instead insisted the miscalculation was immaterial. Its chairman, Mark Wood, refused to hold an investigation.
Going into the AGM, then, many members were angry and planning to ask the board why Nominet was repeatedly ignoring their concerns, was failing to enforce its own rules, allowing UK citizens to be ripped off, and why it was paying itself more and more money while its commercial arms were failing and charitable contributions dwindled. The questions were posted on Nominet’s online member forum, and members made it clear they wanted answers.
At the AGM, which was held virtually due to the pandemic, CEO Haworth got up on stage and told them: “As a member organisation, we rely on the engagement, insight and support of our members. Robust multi-stakeholder discussions and debates are a critical part of what we do and member voices are key. However, I believe we will benefit from resetting our relationship with a small minority of members. It is important the voices of a few are heard but not to the exclusion of the many… the forum is dominated by a handful of posters and it’s increasingly become aggressive and hostile, not least toward our staff… we don’t feel as though we need a Nominet forum. So with immediate effect we are closing it down.”
It was clearly a coordinated moment because seconds later, members reported that the forum had simply vanished. Nominet had pulled the plug, making it abundantly clear it was no longer interested in even pretending to hear their views.
Sat at home watching the event, CEO of hosting company Krystal, Simon Blackler, decided he had had enough and started calling around. Four months later, the PublicBenefit.uk campaign was launched calling for non-elected board members, including the CEO, to be booted off the panel.
In point six of Nominet’s seven-point forgiveness plan released this week, the organization acknowledges that shutting down its members-only official communication channel was a breaking point.
“We acknowledge that the decision to close the Nominet Forum, and the way in which this was done, damaged our relationship with some members in a way we had not intended,” it said. “In conjunction with the RAC [a new advisory council], we will therefore launch a well-governed next-generation member forum.”
The PublicBenefit.uk’s response? “No. The time for change is now. We have a clear plan for a stable, independent Nominet run by its members for the benefit of its members and the wider public.”
Nominet has yet to set a date for the EGM. ®