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Nominet solves rogue domain seller problem

Transfer price reduction removes incentive.

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Nominet has gone a long way toward solving the problem of rogue domain sellers in the UK by reducing transfer fees.

From 1 October, the company that oversees the .uk registry will slash the cost of moving .uk domain names both between agents and actual owners. The result will not only improve competition within the domain name market by making it cheaper to shift Internet names, but also effectively remove a loophole that has allowed some unscrupulous companies to charge customers over the odds.

Because of Nominet's free market approach, a large number of different business models have appeared, contributing to .uk success (it is the fourth largest registry in the world after .com, .de and .net). One approach has been to initially charge consumers less than it actually costs the company to buy the domain. Although it makes a loss at first, when the customer then goes to renew that domain, the company massively increases the cost of renewal. If the customer tries to renew the domain with a different company, the first company then charges a large transfer fee to move it across.

Customers caught in this situation - or even caught in limbo when a domain company goes under - have always been able to go to Nominet as a last resort. But because Nominet doesn't want to impinge on the market, it has felt obliged to charge much more than domain sellers for forcing through a transfer itself.

The reality has been that some companies charge between £40 and £80 (with one occasion of £150) to transfer a domain, while others increasingly offer transfers for free or for nominal amounts. Even if customers become aware that they can go through Nominet, transfer of ownership of a single domain costs £30 plus VAT, and a single change of agent costs £15 plus VAT. During the Firevision issue last year, one reader summed up the frustration felt by emailing us, complaining "£15+vat to change this is extortion". From 1 October, both these fees will be reduced to £10 each.

Nominet CEO Lesley Cowley was keen to point out that the fee change was not a direct attempt to alter the market because Nominet tries to maintain as hands-off a role as it can, but admitted that Nominet was "quite aware that changes we make can have an impact on the market". The price reduction, she explained, has come about thanks to a huge effort to improve the efficiency of Nominet's systems. And since Nominet is a non-profit company, it is able to pass those savings down directly to customers.

While consumers are likely to benefit when using Nominet as a last resort, the larger benefit is to those moving large numbers of domains. While it will cost £10 to move one domain's agent, two or more domains will cost £15, down from £30. And shifting ownership of two or more domains will cost just £22 from £60 previously.

The change is just one of many that Nominet is making as it attempts to expand beyond its role simply as the .uk domain registry and into the wider Internet market. A recent change in its voting procedures means that it will no longer be possible for a small minority of Nominet's members to block the management's plans to take on projects such as ENUM - as happened at an extraordinary general meeting in March. And at the company's AGM at the end of the month, the company will ask members to vote on shifting auditors to Grant Thornton - an indication that the company has grown far beyond its early structure. Cowley told us the company now has a turnover of £13m and needed more tax advice.®

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