Enom 2010 Annual Report Download - page 31

Table of Contents
strict scrutiny by the public and by the United States government. For example, in the United States, Congress has held hearings to evaluate ICANN's
selection process for new top level domains. In addition, ICANN faces significant questions regarding its financial viability and efficacy as a private sector
entity. ICANN may continue to evolve both its long term structure and mission to address perceived shortcomings such as a lack of accountability to the
public and a failure to maintain a diverse representation of interests on its board of directors. We continue to face the risks that:
the U.S. or any other government may reassess its decision to introduce competition into, or ICANN's role in overseeing, the domain name
registration market;
the Internet community or the U.S. Department of Commerce or U.S. Congress may refuse to recognize ICANN's authority or support its
policies, which could create instability in the domain name registration system;
some of ICANN's policies and practices, and the policies and practices adopted by registries and registrars, could be found to conflict with the
laws of one or more jurisdictions;
the terms of the Registrar Accreditation Agreement, under which we are accredited as a registrar, could change in ways that are disadvantageous
to us or under certain circumstances could be terminated by ICANN preventing us from operating our Registrar;
ICANN and, under their registry agreements, VeriSign and other registries may impose increased fees received for each ICANN accredited
registrar and/or domain name registration managed by those registries;
international regulatory or governing bodies, such as the International Telecommunications Union or the European Union, may gain increased
influence over the management and regulation of the domain name registration system, leading to increased regulation in areas such as taxation
and privacy;
ICANN or any registries may implement policy changes that would impact our ability to run our current business practices throughout the
various stages of the lifecycle of a domain name; and
foreign constituents may succeed in their efforts to have domain name registration removed from a U.S. based entity and placed in the hands of
an international cooperative.
If any of these events occur, they could create instability in the domain name registration system. These events could also disrupt or suspend portions of
our domain name registration solution, which would result in reduced revenue.
The relevant domain name registry and the ICANN regulatory body impose a charge upon each registrar for the administration of each domain name
registration. If these fees increase, it would have a significant impact upon our operating results.
Each registry typically imposes a fee in association with the registration of each domain name. For example, the VeriSign registry presently charges a
$7.34 fee for each .com registration. ICANN charges a $0.18 fee for each domain name registered in the generic top level domains, or gTLDs, that fall within
its purview. We have no control over these agencies and cannot predict when they may increase their respective fees. In terms of the registry agreement
between ICANN and VeriSign that was approved by the U.S. Department of Commerce on November 30, 2006, VeriSign will continue as the exclusive
registry for the .com gTLD through at least November 30, 2012 and is entitled to increase the fee it receives for each .com domain name once in either 2011
or 2012. Any increase in these fees either must be included in the prices we charge to our service providers, imposed as a surcharge or absorbed by us. If we
absorb such cost increases or if surcharges act as a deterrent to registration, we may find that our profits are adversely impacted by these third-party fees.
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