How Nominet Spends Your Money

[Siusaidh]

After 3 weeks of pressing for answers, Nominet provided me with at least some figures today at the Members' meeting, about expenditure on 2 projects they baled out of, and the loss-making CyGlass venture.

Automated Cars - cost: £786,000
Spectrum White Space - cost: £1,735,000

And Cyglass, they have confirmed, ran at a loss in the past year. They wouldn't say how much was lost, but as of this point in time that means that Nominet have lost £5,000,000 on this venture.

Add those together and the money paid out = £7,521,000

Further to that, they refuse to disclose figures on their TLD back-end services contracts, but they conceded they probably hadn’t made any profit in the past year. That could have ongoing repercussions for the future accounts.

Is the Board competent? Are members right - for example the 700+ who voted off 5 directors a few weeks ago - to be concerned?

 

[martin-s]

Do those figures factor in revenue (if any) ?

 

[Siusaidh]

Good points, guys.

Martin - there was no revenue from the automated cars or the white space ventures. It was all money paid out. The Chair today justified that as 'research and development' expenditure. You can make of that what you can.

Trauiner - watch the video of today's members' meeting, when Nominet put it online. There was a slide where both these projects were rationalised, and each person can make up their own minds whether the 'gain' in research justified the expenditure.

The jury is out on CyGlass, but as of April 2021 it has run at a loss, not to mention the £5,000,000 acquisition costs. I guess it could be argued they need more time to build up the business. Alternatively, was it part of the previous CEO's dreams of expanding the company into a larger 'for profit' tech business, or (to quote the sacked Chair) that acquiring CyGlass "would make Nominet a global player in cybersecurity".

Personally, I'd rather they focussed on Nominet's core business - the UK ccTLD - and if that guarantees them income, just run it efficiently and reduce wholesale prices.

As things stand, that's £7,486,000 that's historically come from the UK domains, and each person must judge whether that was money well spent, being re-directed into these other projects.

I agree with you, Trauiner, that more detailed info on all these ventures would help. Today they made a start, after some pressurising.

 

[lazarus]

Can someone please tell me again why Nominet has spent £5 Million on Cyglass but choose to use Cloudflare as their cyber defence?

 

[webber]

For such ventures there should be a maximum budget approved by the members at the AGM and these companies should be spun off as separate entities were we can see a clear profit/loss statement, not hide the figures within Nominet's main financial results.
Their claim that they don't have exact figures for GyGlass is ridiculous and the very definition of incompetence. There needs to be clear and separate financial results for CyGlass so we can know exactly how much was spent and when it is time to cut our losses if things don't improve. Because these are OUR losses.
I paid over £2.000 this month to Nominet as registrar and registrant.
The £5 mil they spent on CyGlass is aprox 10% of registry income. So I just paid £200 for CyClass this month alone.
I would have had better return if I invested that in something else

 

[ukbackorder]

I wonder if you looked closely at the board members of Cyglass (and other failed ventures) if you'd find some kind of link between them and certain nominet board (ex)members. I'd love to have other people's money ploughed into my business without returning a profit, having to repay any investment, or providing any information about it. Where did the money go?

 

[monaghan]

Is the Board competent? Are members right - for example the 700+ who voted off 5 directors a few weeks ago - to be concerned?

We signed up to be members of a company running the UK domain registry, at no time to my knowledge did I get asked about diversifying. I can understand DNS as it's hand in hand with the registry, but everything else is seriously out of scope in my opinion.

 

[martin-s]

I can see that Spectrum White Space is a similar business, but it's not for Nominet customers to pay for it.

 

[monaghan]

I can see that Spectrum White Space is a similar business, but it's not for Nominet customers to pay for it.

Not sure I agree with you there, Ofcom should be managing the RF spectrum usage and they do so for overlapping allocations on radio microphone licenses and taxi type radios and so on making this just an extension of their remit using a dynamic allocation, it's more like a DHCP for RF channel allocation rather than domain / DNS system.

 

[martin-s]

Not sure I agree with you there, Ofcom should be managing the RF spectrum usage and they do so for overlapping allocations...

Not a business I know anything whatsoever about. Was a very superficial opinion.

 

[xdnet]

Not sure I agree with you there, Ofcom should be managing the RF spectrum usage and they do so for overlapping allocations on radio microphone licenses and taxi type radios and so on making this just an extension of their remit using a dynamic allocation, it's more like a DHCP for RF channel allocation rather than domain / DNS system.

IIRC Nominet did this for Ofcom.

 

[monaghan]

IIRC Nominet did this for Ofcom.

Doesn't really matter who they did it for, it's not a core domain management activity which is the point of the thread.

 

[xdnet]

Doesn't really matter who they did it for, it's not a core domain management activity which is the point of the thread.

The argument is it's a big database, which is the core activity of Nominet.

So I can certainly see the logic there for it being an appropriate diversification, but they obviously failed at it and absolutely failed to communicate what they were doing with it properly.

I agree they should focus on .UK though, but full context is important.

 

[monaghan]

The argument is it's a big database, which is the core activity of Nominet.

So I can certainly see the logic there for it being an appropriate diversification, but they obviously failed at it and absolutely failed to communicate what they were doing with it properly.

I agree they should focus on .UK though, but full context is important.

Well if you are going to suggest a domain database qualifies them to tackle any other database, then I guess all of their sideline projects becomes valid as virtually everything these days is database driven.

I thought the core activity of Nominet was managing the UK namespace, not developer for hire.

 

[xdnet]

Well if you are going to suggest a domain database qualifies them to tackle any other database, then I guess all of their sideline projects becomes valid as virtually everything these days is database driven.

I thought the core activity of Nominet was managing the UK namespace, not developer for hire.

Excluding Cyber, most of the projects did have a strong 'registry-database' backend bent, again I think their communication around this and what they were actually doing was majorly flawed, totally disagree with the way they managed it.

Frankly most of it should probably have been done as 20% time or similar for the devs to contribute to open source using their experience instead of expensive investments and failed commercialisation attempts.

I'm not defending them doing it, just pointing out the logic behind it as I see it as 2 separate issues, 1) Should Nominet do _anything_ outside of running .UK 2) Were the projects they did do related to their core competencies.

 

[monaghan]

I'm not saying Nominet staff are incapable of doing a non domain name related project, just that it's outside the remit of the company and if Nominet want to compete for outside work, then a review of the company structure needs to take place beforehand, not after the event. There's ways to do external work and Nominet management seem to think they can just do as they want. I'm sure the work done was to good standards and by good staff, it's just that they didn't have it in their remit.

Would love to see the justification for doing the whitespace work for ofcom given the posts above suggest no income was received.

 

[Siusaidh]

I can see that Spectrum White Space is a similar business, but it's not for Nominet customers to pay for it.

Well they did: £1,735,000 lost by the venture, according to Rob Binns when I asked him this week. Profit: £0.

(edit to take account of closer inspection of Nominet disclosures)

 

[monaghan]

Well they did: £1,700,000 paid into the venture, according to Rob Binns when I asked him this week. Return: £0.

Interesting, given xdnet suggested they were working for ofcom then surely it should have been a paid gig, not a freebee?

Are there enough accounting records published and someone with the necessary finance skills to track where the money actually went? I'm no accountant, but none of this seems to add up.

 

[Siusaidh]

Hi Alex,

Nominet originally ran a trial in conjunction with Ofcom on TV White Space, providing a registry for Ofcom for TV White Space in the UK, and the STC in the US. To the best of my knowledge, this was not something Ofcom paid for. It was a collaboration, as Nominet were looking to break into new areas. It was carried out, according to the info provided last week, by Nominet's R&D team.

In 2018, this developed into Nominet's own project: 'Dynamic Spectrum Management', with the hope that they would provide registry services for managing spectrum for telecoms regulators globally. At least, that was what they hoped. By 2020 they seem to have recognised that they weren't going to be able to achieve this, and as of today they say RED Technologies now run and continue to develop the DSM platform that Nominet had been working on.

For the DSN project, Nominet employed 7 full-time staff, costing Nominet £618,000 in 2019 financial year, and a further £484,000 in fy2020 for a reduced staff of 5 full-time employees. In addition there were further costs to Nominet of £509,000 in fy2019, and £336,000 in fy2020. They report they DID receive revenue over these two years of £212,000 in total. £178,000 of that was in the final year 2020 and I suspect that may include any payment Red Technologies made for the platform when they took over.

So you can see that costs were actually £1,947,000.
Revenue was £212,000.

Loss = £1,735,000.

 

[ukbackorder]

But who says you can't like shoes.... that's the main thing.
Maybe we can take it up with them in our 'member hub'. I'm sure Ellie will be very forthcoming with explanations for all these silly little misunderstandings.