Official Statement by Telnic Limited on Digital Economy Bill Section 5.2.3

LONDON, November 20 - Telnic Limited (telnic.tel) is the UK-based Registry
Operator and Sponsoring Organisation for the global communications-focused
Top Level Domain (TLD) .tel. It operates as the Registry for all domain names
ending in .tel, acting under the aegis of ICANN, the body tasked with
governing the security, naming and numbering on the Internet globally. The UK
government has direct influence on ICANN, as it is a member of ICANN's
Government Advisory Council.

As a UK Limited company, Telnic abides by all relevant UK and
European laws currently enacted, including any consumer protection or
business law, as does its contracted sales channel in the UK. ICANN specifies
that, for the TLDs under its control, the sales channel consists of only
those registrars that it separately accredits. This is the case for Telnic.

Regulation by ICANN does not apply to the operators of Country
Code Top Level Domains (ccTLDs, such as .uk) or their sales channels.

The UK government informally notified Telnic one week before
the announcement of its intention to legislate for powers to regulate all
domain registries in the UK. Telnic is dismayed at this proposal. In it, the
UK government proposes giving itself the power to dismiss and replace the
management board of any Registry operating in the UK.

The Bill appears to be intended to regularise relations
between the UK government and the operator of the .uk ccTLD, Nominet.
However, the Bill's phrasing is so general as to apply to all existing and
new Registries, not just the one operating the .uk ccTLD. All other
registries based in the UK are thus "caught in the crossfire". These others
are or will be already regulated by ICANN, as are the Registrars that act as
their sales channel.

The unintended consequences of the generalisation in this Bill
are severe. No commercial company could accept the risk of the UK government
taking over managerial control. Current legislation does not place such a
threat on other service providers; it is unimaginable that this kind of power
would be applied to Vodafone or any other communications service provider,
despite the large volume of regulation in that area. This bill as currently
proposed would reduce the UK's innovation and competitiveness in this market
at a stroke.

The fact that no dialogue regarding this legislation was
offered prior to this Bill is unfortunate. The industry that operates within
ICANN's global control already has a regulatory framework in place.

Recently, as a result of the decade-long evolutionary process,
ICANN, the international governing body in charge of Telnic's regulatory
oversight, has been given ultimate regulatory powers by the US Department of
Commerce precisely because there was concern internationally about any one
government having actual or perceived control over the Domain Name Space. As
currently phrased, this Bill may be misunderstood as an attempt by the UK
government to overrule ICANN's authority, without any attempt to canvas the
views of the industry such a move would affect.

For further information and interviews, please contact: Justin Hayward, Communications Director, Telnic Limited - justin.tel