Reference no: EM131039218

Internet Registry Enhances Island Nation's Economy

Tokelau is a four-square-mile island nation in the Pacifi c Ocean that is home to only 1,500 people. Tokelau has the smallest economy of any country in the world, with an annual per capita purchasing power of $1,000 U.S. Tokelau's government is almost entirely dependent on subsidies from New Zealand. However, is generating income through its country code top-level domain, .tk. As we discuss in detail in Chapter 6, a top-level domain is the highest level in the hierarchical Domain Name System of the Internet. A generic top-level domain (gTLD) is one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet. gTLDs are visible to users as the suffix at the end of a domain name. If you are among the companies trying to obtain one of the nearly 2,000 new gTLDs, the application will cost you about $185,000, plus a $25,000 annual fee. Fortunately, there are cheaper options. One of the most popular domains is .tk, a country code top-level domain (a country code top-level domain is a type of gTLD) similar to .ca for Canada and .fr for France.

Tokelau's prominence on the Internet is a result of the efforts of Joost Zuurbier of Amsterdam. Zuurbier wanted to use Hotmail's business model. He reasoned that if Hotmail could make money by providing free e-mail, then he could make money by offering free domains. He found Tokelau, whose citizens were unaware that they are entitled to their country code domain. In fact, no one on the island had ever seen a Web page before. Zuurbier traveled to Tokelau with the satellite equipment needed for Internet access. After years of effort and many meetings with Tokelau's citizens, Zuurbier's company, Freedom Registry (www.freedomregistry.com), launched its .tk domain in 2006. By mid-2013, more than 9 million Web sites had .tk domains. Freedom Registry continues to expand, particularly by conducting business with emerging economies such as China, Brazil, Russia, Peru, and Vietnam. These countries have local country code top level domains: .cn, .br, .ru, .pe, and .vn, respectively.

However, registering Web sites in those domains can be expensive, so individuals and companies turn to .tkIf Freedom Registry provides domain names for free, then how does it make money? The answer is that the company generates revenue through ads on expired domains. Essentially, when users abandon their Web site or do not meet the minimum requirements of 25 unique visitors every 90 days, the domain is "parked." In other words, the URL still exists, but the content is replaced with ads tailored to the original Web site. For instance, if the original Web site involved travel to Europe, then the ads on that parked site would pertain to European travel. Freedom Registry can target these ads to specifi c audiences because it has software tools that examine the content of all Web sites on the .tk domain.

In return for the use of the .tk domain, Freedom Registry pays part of the money it earns to the people of Tokelau. In fact, one-sixth of the country's economy comes from the .tk domain. In addition, Zuurbier has brought connectivity to the nation. Prior to his arrival, the country had four phone lines that provided only low-bandwidth, dialup connections to the Internet. Today, citizens have Internet access via the satellite connection provided by Zuurbier. There are now 120 computers on the island, although the power still goes off at 10 PM. Tokelau has increased its gross domestic product (GDP) by more than 10 percent through registrations of domain names. In fact, a report from Verisign, the global registry operator for .com and .net, revealed that .tk is the third-most popular country code top-level domain in the world, behind only Germany (.de) and the United Kingdom (.uk). On an unfortunate note, in 2011 the Anti-Phishing Working Group (www.antiphishing.org) claimed that the .tk domain was favored by spammers and scammers. The group rated the .tk domain as one of the most widely used in the world for sheltering criminal Web sites. In response, in 2012, Freedom Registry expanded its anti-abuse strategy by enabling trusted partners to electronically report any active Web sites that are used in spam, phishing, or other abuse. Freedom Registry allows its partners, such as Facebook, Kaspersky Labs, and Twitter, to connect their anti-abuse systems with Freedom Registry's domain name database. When Freedom Registry receives an electronic report of abuse, it immediately blocks the Web site. Sources: Compiled from "Tokelau Profile," BBC News, November 7, 2012; T. Khalid, "How Tiny Tokelau Built a Huge Internet Domain," Internet Evolution, June 11, 2012; T. Andres, "The Tiny Island with a Huge Web Presence," CNN, June 13, 2012; D. Pauli, "Pacific Atoll a Phishing Haven," ZDNet, April 27, 2011; "Biggest Expansion in gTLDs Approved for Implementation," ICANN.org, June 26, 2008; www.tokelau.org.nz, www.freedomregistry.com, accessed April 5, 2013.

Questions

1. Describe several benefits that Zuurbier brought to the citizens of Tokelau.

2. Now that the citizens of Tokelau have Internet access, what other strategies can they use to generate income for themselves?