Activity Report

2009

- 1 -

Contents

Introduction ....................................................................................................2

I. Significant events .......................................................................................41. Call for tender for the management of .fr ..........................................................................4

2. Back-end Registry of .paris: AFNIC/CORE selected by the City .......................................5

3. Clarification in progress for the regulatory framework .......................................................6

II. AFNIC business activity .............................................................................91. Successful standardisation of the registration systemand undertaking a security policy ....9

2. An ambitious R&D policy ...............................................................................................11

3. Stronger international relations ........................................................................................12

4. Increased member involvement in AFNIC technical and marketing decisions ...................13

III. A few figures .............................................................................................151. Activity outlook ................................................................................................................15

2. Financial statement and relevant indicators ......................................................................22

Development and perspectives ..................................................................26

Appendices ....................................................................................................271. Members and the Board of Directors of AFNIC ...............................................................27

2. Employees ........................................................................................................................29

Glossary ..........................................................................................................31

- 2 -- 2 - - 3 -

A final word from out-going Chairman Jean-Claude Gorichon2009 was my last full financial year as Chairman of AFNIC.

I was elected during the first year of “opening” .fr, one month after, to be precise, on 11 June 2004. AFNIC employed about 35 people and .fr counted barely 250,000 domain names.

I will be leaving on 24 March 2010, and we have now nearly reached the milestone 60 employees and almost 1.7 domain names.

Rather than a long and satisfying evaluation of my six years of chairmanship which could pompously be called «But haven’t I done well?”, I would prefer to devote this page to acknowledgement and thanks, less egocentric, but sometimes more sensitive to write, as I would not wish to fall into the trap of sentimentality or the more underhand tone of pretence!

So in six years of chairmanship, I have sat on 20 Board of Directors meetings and worked alongside 23 different Directors. Beyond the classic divides, – users vs registrars vs public ministries – particularly on the subject of registration policy, although sometimes forceful, the exchanges were always frank and courteous.

I would like to take this opportunity to thank the various Directors - appointed from the public sector and elected from the private sector – for their availability, the quality of their work and their oft courageous stances. It has been a pleasure to work alongside them.

Although I have not had the opportunity to meet them all, I would like to thank AFNIC’s employees, without whom, none of this would have been possible. And above all the CEO, whose diplomatic qualities have been widely noted and who always skilfully defended ideas he believed in and even more judiciously shared them through consultative and decision-making bodies at which he presented them.

However my last vow of thanks unquestionably goes to the Minister for Industry and Electronic Communications, who just prior to my departure now at the beginning of 2010, has given me the great pleasure of officially designating AFNIC as the Registry of .fr.

I can therefore leave peacefully, leaving to my friend and successor, Jean-Pierre Dardayrol, a finally legitimised AFNIC. I wish him as much happiness as I have experienced during my six years of chairmanship.

As far as I am concerned: Mission accomplished!

Jean-Claude GorichonChairman of the Board of Directors

June 2004 - March 2010

Introduction

- 2 -- 2 - - 3 -

A word of welcome from Chairman Jean-Pierre DardayrolAlthough I was only appointed on 24 March 2010, I have the pleasure of presenting this activity report to members – in a dematerialised format - at the ordinary General Assembly of 11 June 2010.

First of all, I would like to thank the Directors who have put their trust in me and made me Chairman and of course, I would like to congratulate my predecessor, Jean-Claude Gorichon for the extent and quality of results achieved over the past six years, rewarded on 2 March this year.

As the third Chairman of AFNIC, I take up the torch fully aware of the responsibilities which await me. My wide experience in the fields of Research, the tertiary sector and more recently consulting, particularly in information systems security, allow me to envisage the role positively and serenely and AFNIC’s position in the Internet of the future; nevertheless, I am also aware of the trials and difficulties awaiting us in an innovative and competitive world where it is imperative to be among the best.

As AFNIC has henceforth been appointed Registry for .fr, new obligations are incumbent upon it in an inspirational and stable context. Starting with the pursuit of modernisation and development efforts which have been made over these last few years. This will be one of the objectives on my mandate. In the mid-term, I will not forget the upcoming calls for applications to manage ultra-marine country-code Top Level Domains and new new Top Level Domains such as .paris which will represent structuring work for us all.

In the pluralist and collegial context, which is required for our action and success, I shall strongly pursue the directions already taken by the organisation and work towards providing AFNIC with the visibility it deserves in all areas of expertise.

The job in hand is important and therefore exciting.

Jean-Pierre DardayrolChairman of the Board of Directors

March 2010

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Call for tender for the management of .fr

Chronological reminder

The Act of 9 July 2004 - amending article L.45 of the French Electronic Communications and Telecommunications Act 1 - placed the principle of allocation by the Minister for Electronic Communications, with “bodies responsible for allocating and managing domain names […] according to country”.

On 6 February 2007, a decree of application 2 stipulated the requirements of bodies responsible for allocating and managing domain names (called “Registries”), their role, as well as that of registries, and introduced a new legal framework for domain names according to country. The terms and conditions of appointing offices were clarified: each office is to be selected following public consultation, by decree of the Minister for Electronic Communications.

In spring 2008, The Ministry of Economy, Finance and Employment launched the public consultation 3 on the criteria to be considered during selection of any future Registries. Thirty two responses were received by the Ministry (including one from AFNIC), which published a summary 4 on its site at the end of October 2008.

On 15 January 2009, “the call for applications was launched to allocate the registry of the .fr Internet domain” 5 by the Minister of Economy, Industry and Employment. AFNIC filed its application on 9 March.

Broad outline of AFNIC’s response

AFNIC’s response was largely based on the following points:

Firstly, a series of softening the eligibility conditions intended to allow French nationals ●living abroad, then legal and individual entities located within the European Union to register .fr domain names ;

Upholding main policies in terms of identification, data protection and litigation ●management, and long-term, the principle of rethinking the list of fundamental terms and conditions;

1 Significant events

1 http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000000439399&dateTexte=2 http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000000439399&dateTexte=3 http://www.telecom.gouv.fr/actualites/25-avril-2008-consultation-publique-sur-les-noms-domaine-internet-1655.html4 http://www.telecom.gouv.fr/fonds_documentaire/consultations/08/fr/synthese-contributions.pdf5 http://www.telecom.gouv.fr/fonds_documentaire/consultations/09/app09fr.pdf

1

- 4 -- 4 - - 5 -

Establish a Registrar Service Quality Report to increase market transparency for the ●public, but also to create a real, differentiating status subject to conditions; consequently, involving revision of the directory currently available on the website;

Strong commitments in terms of investment to ensure the security and stability of . ● fr, from strengthening infrastructures (anycast, for example) to the development of an Activity Continuation Plan (data embargo...);

Specific commitments in terms of service quality, by producing indicators covering ●the various AFNIC missions (DNS resolution, registration and activation, Whois and availability checks, for example);

Ambitious R&D commitments, confirming a certain number of existing directions and ●extending the prospects.

At the end of 2009, negotiations started on the agreement between AFNIC and the State, with the aim of consolidating certain of AFNIC’s current practices (consultation to develop general interest policies, Whois data quality control, protect common interests, for example) and to define the levels of essential service quality regarding DNS, the registration chain and customer support.

These negotiations should be finalized in early 2010 and lead to AFNIC appointment by the Minister for Electronic Communications.

Back-end Registry of .paris: AFNIC/CORE selected by the CityOn 26 June 2008, following a Board of Directors’ meeting in the French capital, ICANN officially announced the launch of a procedure to create new Top Level Domains.

The City of Paris immediately announced its intention to apply for .paris, anticipating interest from:

Individuals, the local organisational sector and certain ●institutional players, for whom a .paris website would demonstrate their belonging to the Parisian community;

Commercial and cultural service providers, for whom . ● paris would constitute a marker of proximity and strengthen their online presence;

And large brands or brand owners, who will use . ● paris as a supplementary tool to enhance their image, particularly in tourism, catering, fashion and luxury goods sectors, to name but a few.

2

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In order to meet the necessary technical requirements to manage a Top Level Domain, imposed by ICANN in the context of the application, the City of Paris has been required to enlist the services of a technical operator. On 30 September 2009, it selected the joint-venture formed by AFNIC and CORE, managers of .fr and .cat respectively (TLD launched in 2005 aiming to promote Catalan culture).

The union of two Registries – who have known each other for a long time and already worked together – constitutes a real advantage for the .paris project; AFNIC, as the registry for .fr enjoys local “celebrity” and works with a network of registrars likely to be interested in this new extension. CORE manages the aspects related to obtaining ICANN approval, owing to its

experience with .cat or .museum in particular.

The French-Swiss group will firstly be responsible for responding to the technical requirements of the ICANN application. It will then become the operator of the .paris extension on behalf of the City, in the context of a service concession.

The partners will contribute to any investment required and will share the Registry responsibilities as set out below: AFNIC will provide the registration chain and CORE will provide, in particular, the availability of DNS infrastructure and the Whois interface.

Regarding the schedule, ICANN must register its intention to file an application (obligatory call for expression of interest procedure) in the second quarter of 2010. The application can actually be filed at any time throughout 2011. ICANN shall thus procede with evaluating the .paris application, which will be launched in 2012.

Clarification in progress for the regulatory frameworkThe year 2009 is interesting with regard to legislation, particularly following decree n° 2007-162 of 6 February 2007 relating to the allocation and management of .fr domain names.

A judgment from the Court of Cassation highlights the domain names affected by the decree of 6 February 2007 and the limit of jurisdiction of the summary applications judge with regard to domain names; two other rulings by the Courts of First Instance are however less certain and are subject to an appeal, the result of which shall probably not be known before the end of 2010.

The noteworthy judgment of 2009 is from the Court of Cassation; by order of 6 June ●2009. It is positioned on two important points:

3

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It is henceforth understood that domain names registered prior to 6 February 2007 -are not subject to articles R.20-44-34 to R.20-44-51 of the French Electronic Communications and Telecommunications Act resulting from the decree of 6 February 2007: “Whereas (…) if the new law shall apply immediately to the future effects of current non-contractual legal situations at the moment it comes into force, it cannot bring into question the validity of a situation constituted lawfully at that date.”;

Moreover, the summary applications judge does not have the power to order a -domain name transfer measure, such a measure not being considered as a restorative or a protective measure: “whereas to order the transfer of the domain name registration sunshine.fr to SNC Sunshine, the order reserves that Mr D. has no right or legitimate interest in choosing the domain name which is a company brand, and that the judge, with the powers of article 809 of the civil procedure code must order the transfer;

whereas such a ruling when the transfer of domain name registration to the Sunshine company does not constitute either a protective measure or a restorative measure, the Court of Appeal has exceeded its powers.”

The two rulings of the Paris Court of First Instance of 26 August 2009 and Versailles of ●6 October 2009 address more specific points on the relationships between AFNIC, the Registrars and the registrants. These two rulings are subject to appeal and cannot – at the end of 2009 – be considered as definitive:

if the judgment of the first instance of 26 August 2009 stipulates that - “AFNIC has not committed any wrongdoing by not implementing any blocking measures or freeze on the domain names appearing in the summons of 1 December 2008”, it is however stipulated that the Registry has an obligation of results and it should act upon mere notification by an owner of the existence of a domain name undermining its rights: “(…) as soon as it has been notified by the owner of the existence of a domain name that it manages undermining intellectual property rights, it is bound, as well as Afnic by an obligation of results, pursuant to article R.20-44-45 of the aforementioned French Electronic Communications and Telecommunications Act”.

There is thus some uncertainty as to the fact of knowing whether AFNIC is required -to implement the requested measure as soon as it is informed of the existence of a right;

The ruling by the Versailles Court of First Instance of 6 October 2009 is focused on -another aspect entirely: the obligations of the Registry and those of the Registrars.

If the obligation of professional advice does not emerge from the Decree of 6 February 2007, nor the naming charter, – towards the registrant – under the responsibility of AFNIC, the Versailles Court of First Instance ruled that: “AFNIC, taking into account the obligation of professional advice, shall not effectively hide behind the vagueness of the vocabulary used by Francelot’s advisor, requesting that the address be returned”.

Moreover, the same judgment rules that the contractual obligation of the Registrar to safeguard AFNIC against any blame which may be laid upon it, on this occasion, shall not exceed the limitations of an obligation of means (and not results).

- 8 -- 8 - - 9 -

These two judgments thus clearly raise questions on the responsibilities of the future registry and those of the registrars. The rulings on appeal will be followed with interest.

However, it is worth noting that in these two judgments from the Courts of First Instance - through “justifications” - the judges approved the mechanism of anonymising personal information on domain name owners, and individual entities implemented by AFNIC.

Finally, this section on legislation would not be complete without mentioning an “inconsistency” in a ruling by the Paris Court of First Instance made after publication of the Order of the Court of Cassation of 9 June 2009 and relating to a noble title.

In fact, on 12 December 2009, the Paris Court of First Instance ordered the transfer of the domain name comtedeparis.fr to the Prince of Orléans, Count of Paris, Duke of France, pursuant to article R.20-44-46 of the French Electronic Communications and Telecommunications Act, even though the domain name had been registered in August 2006, namely six months before the decree of 6 February 2007 came into force.

It does not seem that the legislation of the Court of Cassation should be brought into question.

- 8 -- 8 - - 9 -

Successful standardisation of the registration system and undertaking a security policy The launch on 30 March 2009 of the new EPP-based registry system (Extensible Provisioning Protocol) – a standardised communication protocol between Registries and Registrars – was a success, following 12 months of planning.

The transition from the old registration system to the new took eight hours. This migration did not encounter any significant problems and a first EPP domain name was registered by a registrar in the first minutes of operation.

AFNIC ensured that EPP implementation had the least possible impact on the Registrars, who did not wish to use it from 30 March. The email and web-based registration interfaces were therefore preserved and updated in order to integrate new administrative and technical procedures. All documentation has been recombined into two documents: The Procedures Manual and a new technical Integration Guide.

Nine months after the launch of EPP, the usage figures are more meaningful:

Over 50 Registrars already use EPP for . ● fr; the last two « high volume » registrars are preparing their system for migration in early 2010;

71.5% of all domain name operations are performed using EPP; ●The rate for domain name creation stands at 63%, which represents around 220,000 ●creations in 2009;

Over 180 million EPP requests have been performed. ●

2AFNIC business activity

1

- 10 -- 10 - - 11 -

AFNIC also took advantage of launching the new registration system to implement a list of its services (EPP, Extranet, Whois…), in real time on its operations site: http://operations.afnic.fr/.

Finally in November 2009, AFNIC was able to restart, in a basic fashion, the procedure of identifying legal entity owners, which was suspended since the launch of EPP. The backlog of identifications will be processed progressively over the first six months of 2010 in order to best safeguard the information database published by AFNIC, commonly known as “Whois”.

With regard to the security policy, various action has been taken and consolidated.

At the end of 2009, AFNIC launched its own anycast cloud. In addition to two anycast servers managed by PCH and Netnod (Autonomica), AFNIC now directly manages a third anycast server based on a high-availability global node in Lyon (France) and a local node on Reunion Island.

Geographical distribution of authoritative DNS servers for .fr and .re, on 31 December 2009 (Source: AFNIC)

AFNIC has also taken measures aiming to improve control of its applications. A rate-limiting mechanism has been implemented, regulating EPP server traffic, in particular to discourage the few providers who frequently send millions of requests with the sole purpose of finding a domain name that will fall into the public arena.

Services :

EPP :Extranet :

Form 2.5 :

EPP :

Extranet :

Form 2.5 :

GDD : Support :

Webservices : Whois 43 :

Last reload : 16:00

OPEN

OPEN

Production

Test

AFNIC

- 10 -- 10 - - 11 -

Finally, 2009 was the year preparatory work began for the introduction of the DNSSEC protocol for .fr. The digital signature for the French zone – to secure data sent via DNS – is planned for mid 2010.

An ambitious R&D policy According to its commitments in response to the call for applications for the management of .fr, AFNIC is pursuing its R&D development policy. An extra engineer arrived in January 2009, which brings the number of R&D staff to five at the end of 2009.

As well as the internal and external transfer of knowledge and know-how, the IETF standardisation contribution activity and overseeing various works (domain names, IPv6) or activities (RIPE, CENTR-Tech, DNS-OARC, etc.) has particularly intensified.

A pioneering project of 2009, « multi-root ONS » took on a new scale and was selected in the context of the call for Verso projects for the Internet of the future. This project was christened WINGS (Widening Interoperability for Networking Global Supply Chains) and aims to improve the infrastructure of the supply chain for traceability, taking into account the aspects related to Internet governance.

In 2009, particular attention was focused on the two following projects:

Following “DNSwitness”, with the development of its second DNS logs/traffic analysis ●component aimed at authoritative DNS servers and administered by AFNIC.

The main objective of this second section is to study certain client technical characteristics interrogating AFNIC servers (IPv6 transport support, EDNS0 support) and following their previous development based on the history of statistical data collected over a long period.

This platform, which still requires work to perfect and optimise it, has inspired various studies, including one on the 100 most requested domains – a study which showed the number of possible traps in this type of measures (and which could be the subject of a scientific publication) – and an OECD paper (to be published in 2010) regarding the metrics used to measure the penetration rate of IPv6.

Selection of the “Proxi-Produit ● 6 ” project by the Internet Usage (DUI), following the “Proxima Mobile” call for projects of last July.

With a budget of 10 million Euros, Proxima Mobile joined the digital section framework of the relaunch Plan dedicated to innovative web applications and uses, specifically regarding Internet. Its aim is to allow free development of services of general interest and applications, accessible from mobile phones connected to the Internet.

2

6 http://www.proximamobile.fr/resultats/consommation.html

- 12 -- 12 - - 13 -

3

The Proxi-Product consortium, comprising GS1 France, creator of the CodeOnline service, SBW specialised in the development of mobile applications and AFNIC, developed a project which will provide access to precise, detailed information on fast moving consumer goods (information from producers, nutritional advice, allergenic ingredients, sodium content, patient information leaflets for medicines, etc.). All users shall henceforth be able to access such information via two channels, namely an optimised web portal for mobiles and downloadable applications.

The Proxi-Product project was launched in November 2009 and shall continue into 2010. The role of AFNIC is to advise on service architectures and implement a local, combined ONS service, which is a kind of directory enabling Internet referencing of objects (products) which have a bar code.

Stronger international relations In 2009, AFNIC increased its international activity in various ways, from attending events which dominate the news in its field and the Internet in general, to joint action or projects with partners, as well as being involved in structured organisations.

In 2009, while maintaining regular participation in CENTR General Assemblies, AFNIC increased contribution of its range of industry experiences to working groups from the aforementioned CENTR by reporting its progress on registration operations, and its current stance on registration and marketing policy. It is interesting to note the presentation of the new EPP-based registration system.

In May 2009, this presentation directly led to four managers from the Dutch registry (.nl) visiting the AFNIC premises, who wished to meet the managers of the EPP project and identify the reasons behind its success. Development, customer support and communications managers exchanged tips on “good practice”, which was much appreciated by both parties.

In R&D, the closest links were forged with the Swedish registry (.se). In October 2009, a delegation from IIS.SE came to visit AFNIC. The subjects discussed included candidates for collaboration, draft measures, the Internet of things and DNSSEC, to name but a few. This experience will be repeated in 2010 and shall extend to other CENTR members with structured R&D activity. A topic for discussion will arise completely naturally: studying the idea and if necessary, the means of creating an R&D branch in CENTR, following the example of existing “Tech” and “Legal Admin” branches.

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During this year of invitations to tender for the contract regarding the .fr registry, AFNIC is paying greater attention to opportunities for developing new markets, particularly in the context of the ICANN invitation to tender based on opening new gTLD. In March, AFNIC left the headquarters it was occupying at ccNSO, but highlighted its action at ICANN General Meeting level which provide an opportunity to obtain information, develop a social network in this community, monitor partnerships and develop them if possible. In effect, last summer, AFNIC recruited a business manager who is committed to developing and monitoring contracts with international partners.

Finally, with regard to co-development, AFNIC has updated its policy with emerging markets by creating the International College Fund. Its aim is to provide full or partial funding for projects and concrete action particularly in the fields of capacity strengthening, promoting the International College and co-developing services and/or products intended for Members of the College.

In 2009, nearly 50K€ was granted, particularly for regional Information Technology Trainers’ training projects (FFTI), organising the «Inet Dakar 2009» conference and organising the AFTLD workshop in Dakar for the administrators of the West African Registry.

Still on the subject of co-development the IGF Forum provided AFNIC with the opportunity to meet its co-development partners and registry counterparts in emerging markets. émergents. This enabled preparation for the NIC-Mali directors’ study visit to take place, who visited AFNIC’s premises at the beginning of December 2009 for a two-day seminar on the management of the .fr Registry.

Increased member involvement in AFNIC technical and marketing decisionsThe Articles of Association of AFNIC have always encouraged collaborative work with members through consultative committees.

At the end of 2005, these exchanges were strengthened with the creation of three working groups, “technical”, “legal” and “marketing and communication”. These highly-appreciated working groups are real sites of exchange where various current topics are the subject of free discussion and proposals for implementation or development.

At the end of 2008 and early 2009, for example, the conditions for EPP deployment were widely debated in these working groups; this type of closer collaboration between AFNIC and its members is one of the keys to the rapid success of this project and use of this new protocol by almost all the “high volume” registrars in under nine months.

Administrators of NIC Malia at AFNIC

December 2009

4

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Moreover, the members were able to familiarise themselves and contribute to realising Quality of Service Report pre-projects and showcase the most active and highly-trained Registrars on .fr. These exchanges also provided the opportunity to for communication appraisals and listen to comments on the different analysis and monitoring tools such as the Registrar Satisfaction Survey.

Wishing to further improve certain aspects related to promoting .fr, AFNIC recruited to its Marketing & Communication Department a Registrars marketing liaison manager.

The aim of doing this was to improve understanding of the daily problems encountered by those who have dealings with AFNIC by organising regular meetings in the field. These sources of information are integrated into the process of continuously improving current and future services. To date, around thirty have already been visited in both France and Europe and have already contributed to supporting promotion of their activity. In addition, they offer a unique opportunity to develop special relations and provide solutions to the .fr strategy in a competitive world.

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Activity outlook

Gross figures in 2009 regarding operations (invoiced or not) relating to domain names

Creations 531,415Restorations 7 11,941Deletions 240,817Transfers to another holder 22,154Changes of Registrar 45,620Number of domain names which were subject to a judicial or extrajudicial dispute 8 201

Number of domain names which were subject to an eligibility check by AFNIC services 564

3A few figures

1

Development of the number of .fr domain names

Variation Total .fr

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

+33%

+66%

+40%

+32%

+23%

7 The process of reactivating a domain name during the 30 day redemption period following a deletion ; this service was opened in April 2009. 8 Through the WIPO arbitration centre, the Paris mediation and arbitration centre (CMAP), AFNIC’s PREDEC procedure to resolve cases of obvious violations of the provisions of the decree of 6 February 2007

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The .fr grew steadily in 2009 and seems to be weathering the economic storm better than other Top Level Domains. The renewal rate remains high at nearly 81%.

In 2009, the average number of domain names generated continued to increase and reached over 44,000 per month. A study of registrant type indicated that 50% of names were generated by individuals.

Apr.-04

July-

04

Oct.-04

Jan.-

05

Apr.-05

July-

05

Oct.-05

Jan.-

06

Apr.-06

July-

06

Oct.-06

Jan.-

07

Apr.-07

July-

07

Oct.-07

Jan.-

08Apr.

-08

July-

08

Oct.-08

Jan.-

09Apr.

-09

July-

09

Oct.-09

010,00020,00030,00040,000

50,00060,00070,00080,000

90,000

Jan.-

04

Development of the number of monthly creations since 2005

Renewal rates of .fr domain names

78%

83%

88%

93%

2005 2006 2007 2008 2009

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Below are some figures on mid-year activity compared to other TLDs:

5,7%

Breakdown of the main domain names registered in France in July 2009 (Sources: ZookNIC and AFNIC)

.mobi 0.4%(+0.4 in one year)

.biz 1.7%(+0.3 in one year)

.info 3.5%(-0.1 in one year)

.eu 5.7%(+0.2 in one year)

.org 6.4%(+1.1 in one year)

.net 7.3%(-0.5 in one year)

.fr 33.3%(+4.1 in one year)

.com 41.7%(-5.5 in one year)

0% 10% 20% 30% 40% 50% 60% 70%

One year's growth in the number of names registered in June 2009, various domains(Source: AFNIC, Study of 50 largest domains worldwide)

Dom

ain

Increase in one year ((June 2008 - June 2009)

Mean growth, 50 largest TLDs:

+ 9% in one year

+6% on gTLDs+13% on ccTLDs

.lv (Latvia); 53%

.cz (Czech Republic); 30%.lt (Lithuania); 27%

.ro (Romania); 69%

.pl (Poland); 34%.ru (Russia); 43%

.pt (Portugal); 33%

.si (Slovenia); 21%.tr (Turkey); 21%.ie (Ireland); 21%.br (Brazil); 21%

.se (Sweden); 19%

.sk (Slovakia); 19%.ar (Argentina); 19%

.ca (Canada); 17%

.fi (Finland); 17%

.hr (Croatia); 17%.es (Spain); 16%.cl (Chile); 16%.is (Iceland); 16%

.il (Israel); 15%

.be (Belgium); 15%.nl (Netherlands); 15%

.fr (France); 25%.mx (Mexico); 24%

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On the national market, .fr now provides much of the growth in the domain name market and is strengthening its position as France’s favourite domain.

The median end-user price of an .fr from the registrars has aligned with that of generic domains for the past two years at around 12€ ex VAT. Wide variations exist however according to the associated services offered and the targets selected (individuals or businesses).

Secondary market activity

The “secondary market” sector develops alongside the size of the Top Level Domains. The latest figures at the end of 2009 confirm the attractiveness of .fr domain names with a 30% increase in the number of transactions in 2009 compared to 2008 and the enhanced value of the transactions.

.info ; 171 €

.biz ; 210 €

.de ; 260 €

.eu ; 292 €

.org ; 295 €

.com ; 318 €

.at ; 331 €

.net ; 409 €

.es ; 415 €

.uk ; 547 €

.fr ; 651 €

0 € 100 € 200 € 300 € 400 € 500 € 600 € 700 €

Dom

ain

Median prices for country-code domain names traded on Sedo in Q2 2009(Source: Sedo)

in Q2 2009:

Mean of all domains' median prices €350

Mean of all domain nams prices €1200

Median prices (€)

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Development of the number of DNS requests in 2009

“Client” development

On 31/12/2009, AFNIC's registrars numbered 834 (compared to 941 on 31/12/2008). The trend for concentrating activity increased yet further in 2009; over a hundred low volume registrars chose to either give up managing domain names or to transfer to a larger facility.

The proportion of registrars choosing the fixed price “option 1” (€1450 ex VAT per year plus a unit cost for services of €4.80 ex VAT) has remained steady over the past two years, at around 10%.

This 10% manages 92% of all domain parking handled by AFNIC.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Trend line

Number of requests received per second by AFNIC-run authoritative DNS servers for the .fr domain, Sept 2009

Mean at end of 2007 :

2,000 requests per second

2008 mean:2,700 requests per second

No.

of r

eque

sts

rece

ived

per

sec

ond

by th

ese

serv

ers

Months

Mean at start of 2009 :

3,100 requests per second

Sept.-0

7

Oct.-07

Nov.-0

7

Dec.-0

7

Jan.-

08

Febr.-0

8

March-0

8

Apr.-08

May-08

June

-08

July-

08

Augus

t-08

Sept.-0

8

Oct.-08

Nov.-0

8

Dec.-0

8

Jan.-

09

Febr.-0

9

March-0

9

Apr.-09

May-09

June

-09

July-

09

- 20 -- 20 - - 21 -

Breakdown of registrars by domain portfolio size in 2009 (834 registrars)

10,000 domains and more2.4%

From 50 to 499 domains46.6%

From 5 to 49 domains28.5%

Less than 5 domains9.7 %

From 5,000 to 9,999 domains1.6%

From 500 to 4,999 domains11.2%

0

200

400

600

800

1,000

1,200

Dec-04

Apr-05

Aug-05Dec-0

5Apr-0

6

Aug-06Dec-0

6Apr-0

7

Aug-07Dec-0

7Apr-0

8

Aug-08Dec-0

8Apr-0

9

Aug-09Dec-0

9

Option 1 Option 2 Total

Development of the number of AFNIC registrars between 2005 and 2009

- 20 -- 20 - - 21 -

For the first time in 2009, a league table of registrars was released, based on the size of their .fr portfolio.

0

5

10

15

20

25

30

35

40

45

50

December 05 December 06 December 07 December 08 December 09

Registrar managing 50% .fr Registrar managing 66% .fr Registrar managing 75% .fr

Development of the number of AFNIC registrars between 2005 and 2009 managing at least 50% .fr domain names

5,3215,8946,2926,3657,0807,4358,0848,2008,3488,8389,27712,01312,81713,05013,72614,94515,14616 56118,336

27,18532,20034,00438,160

44,18846,169

55,87374,833

179,755233,702

426,134

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000

E-ZONE Neuf Cegetel

Domaine.frDrim

NfranceArs ys

As cio Technologies Inc.Linkeo

AB Connect / Hos teurTucow s

V iaducCronon AG

MailclubWeb Intelligence

Names hieldNetis s ime

United-DomainsMelbourne IT Ltd

LWSPages Jaunes

INDOMFrance Télécom

NamebayEuroDNSNordnet

Online S ASAmenGandi

1&1OV H

Number of domain names managed

Top 30 Registrars according to the number of .fr domains managed in December 2009

- 22 -- 22 - - 23 -

Financial statement and relevant indicators

The operating income is more than 2% above predicted owing to the satisfactory level of .fr domain name creations and implementation of a service to restore domain names following deletion.

Development of operating income

0123456789

Resources (Millions of Euros) 4.578 5.836 4.219 6.717 8.329

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

2

7%

31%

55%

7%0.5%

Structure of AFNIC resources in 2009(thousands of Euros)

8%

35%

0.1%5%

52%

Subscriptions/Fixed rate fees

Misc.

Creations

Project subsidies

Maintenance

2008 (Reminder)

- 22 -- 22 - - 23 -

Maintenance obviously takes a larger and larger share of AFNIC resources over the years and the number of creations is always increasing.

0500

1,0001,5002,0002,500

3,0003,5004,0004,5005,000

2005 2006 2007 2008 2009

Financial year

Thou

sand

s of

Eur

os

Development of AFNIC invoicing to registrars for .fr domain name service provision

Subscriptions/Fixed rate fees Misc.Creations Maintenance Project subsidies

9.0 €

6.5 €

4.8 €4.8 €4.8 €

5.8 €5.8 €5.8 €

3 €

4 €

5 €

6 €

7 €

8 €

9 €

10 €

2005 2006 (Drop on 01/06/2006)

2007 2008 2009

Financial year

Am

ount

in E

uros

Option 1

Option 2

Development of AFNIC invoicing to registrars for .fr domain name service provision

- 24 -- 24 - - 25 -

Since 2007, AFNIC has stabilised its prices, which are competitive compared to those of other ccTLDs. It is nevertheless strengthening investment capacity in security and R&D.

The expense structure in 2009 is almost identical to that of 2008. These expenses are less than 4% compared to the planned budget for the two following major reasons:

Essential recruitment in the second semester, ●Large drop in the cost of consulting public databases owing to a change of operator. ●

AFNIC charge structure in 2009

Labour cost54%

Fees / Subcontracting11%

Real estate expenses4%

Operating (other)31%

Development of AFNIC charges

0

1

2

3

4

5

6

7

8

2005 2006 2007 2008 2009

Financial Year

Am

ount

/ M

illio

ns o

f Eur

os

Total Labour cost

- 24 -- 24 - - 25 -

* N.B. The change in the method of invoicing for maintenance explains the 2007 profit; using an identical accounting method, the 2007 profit would have exceeded 0.259 M€

A large operating profit for 2009 can be explained by the combination of two factors:

An ever growing number of creations and implementation of the service to “restore” ●domain names;

And unused budget money. ●

Conclusion

Despite a slightly lower renewal rate than predicted (81% instead of 84%), 2009 is generating a largely positive profit owing to a better than predicted operating income and controlled costs. Moreover, six employees were recruited during the second semester which only partially affected the wage costs in 2009.

The only notable increase in costs was in the legal sector owing to the increased number of litigation procedures in 2009.

Concerning investment, AFNIC’s security policy was strengthened, consequently equipment was purchased and work carried out in early 2009, focusing on the main AFNIC projects, namely the Anycast cloud, developing a virtual server environment and strengthening electrical infrastructures.

-1,500

-1,000

-0,500

0,000

0,500

1,000

Profit 0.371 0.861 -1.117 0.270 0.727

FY 2005 FY 2006 FY 2007* FY 2008 FY 2009

Development of the operating profit in Millions of Euros

- 26 -- 26 - - 27 -

With 23% growth in 2009, .fr has had yet another successful year. The registration policy will become more lenient when .fr becomes available to French nationals residing abroad, in early 2010 then in all probability to EU nationals at a later stage as mentioned in the call for applications from the French Ministry.

The Registry's development strategy to include other Top Level Domains is taking shape with the .paris project. First steps have already been taken with the selection of the AFNIC / CORE partnership by the City of Paris as a technical registry; ICANN’s schedule will specify the timeframe for materialisation of the project.

Positioning of the expertise and R&D centre is also enhanced through AFNIC’s participation in R&D projects at European and International level. In addition to pursuing some large projects such as “Proxi-produits” and WINGS (also known as multi-root ONS), there is also “THD” or “Très Haut Débit” with Capdigital, support in DNSSEC deployment and probably support for NIC Tunisia with its ccTLD project in Arabic script.

Finally to optimise success in its objective of operational excellence, AFNIC is undertaking fundamental work on improving security, quality of service and customer satisfaction. In 2010, AFNIC will keep its focus on these issues:

In the context of its Business Contingency Plan, a project to transfer the production site ●to an external data centre;

Commitments to quality of service targets (DNS, registration system, customer support, ●maintenance);

And improving the transparency of the Registrars’ offer to end clients with a three-part ●project: provision of an online directory with relevant research criteria, promotion of registrars who are heavily involved with .fr owing to a “special status”, and realisation of an Registrar Quality of Service (and costs) Report.

With its high commitment to managing the quality of its services, AFNIC has undergone significant changes in the last few years, especially its Registry policies and its registration systems. Working in close collaboration with its members has enabled clear definitions of the expectations of both Registrars and users and triggered appropriate – as far as possible – responses while adhering to the best practices already observed among its European counterparts.

AFNIC intends to continue on this track over the coming years and finally be legitimised by its upcoming appointment as Registry for .fr by the French Minister for Industry.

Development and perspectives

- 26 -- 26 - - 27 -

Members and the Board of Directors of AFNIC AFNIC was formed in 1997, as a non-profit organisation (Act of 1901). It is the only body entitled to allocate .fr (France), .re (Reunion and .tf (French Southern and Antarctic Lands).

Its missions are:

To allocate and manage the internet domain names cited in article L.45 of the French ●Electronic Communications and Telecommunications Act,

To develop service support for digital economy applications and their provision to service ●providers,

The national and international transfer of knowledge and know-how, ●Any mission entrusted to it by the authorities in the context of Internet management. ●

Its members

Three large colleges form the members of AFNIC as well as founding members (4 entities present on the Board of Directors) and honorary members (2 individual entities):

The registrar members (option 1 and option 2); ●The user members (legal and individual entities); ●The members from the International College. ●

At 31 December 2009, the 139 members of AFNIC could be divided as follows:

Appendices

1

Breakdown of AFNIC members

Registrars option 137%

Registrars option 214%

UsersLegal entities

12%

UsersIndividual entities

14%

International College23%

- 28 -- 28 - - 29 -

The main consequence of changing the Articles of Association has been a much more consistent situation with regard to member diversity; If the Registrars members remain a majority at 51%, the users will then form 26% and the International College, 23%.

Board of Directors at 31 December 2009

The founding members appointed:

For the French National Institute for Research in Computer Science and

Control, INRIA

For the French Ministry

for Industry

For the French Minister

for Electronic Communications

For the French Minister

for Research

Jean-Claude Gorichon •(Chairman)Jean-Pierre Verjus•

Anne Laurent• Jean-Marc •Dessapt

Dany •Vandromme

Members elected by college:

For the Registrars’ college For the Users’ college For the International college

Group NBT France: •Peter Cousyn INDOM: Stéphane Van •Gelder

ACFCI: Philippe Clerc•ISOC France: •Laurent Ferrali

University of Conakry: •Abdoulaye Diakité

A government commissioner:

Mr Perica Sucevic, appointed by the French Ministry for Electronic Communications.

The structure of the Board of Directors of AFNIC – 5 members of the public appointend per 5 elected members – has not been modified since its creation; its composition has however slightly developed in 2009.

The two representatives from the ● French ministry for Industry and electronic communications have changed: Mrs Anne Laurent has replaced Mr Vincent Théry and Mr Jean-Marc Dessapt has replaced Mrs Sylvie Metz Larue respectively.

Moreover a new representative of ISOC France was appointed: Mr Laurent Ferrali replaced ●Mr Philippe Batreau.

- 28 -- 28 - - 29 -

Employees

For the second consecutive year, AFNIC has recruited a lot of people: Ten in 2009, with two departures, with a net growth of eight employees.

Among this recruitment:

5 were technical staff (engineer or technician); ●2 were operational staff (a manager, a domain name management agent); ●2 were staff to work in the Marketing & Communication department; ●and 1 secretary. ●

AFNIC exceeded 50 employees in March 2009; it will continue its recruitment policy in 2010 even if the rate needs to slow slightly compared to the two previous years.

Development of the number of employees – AFNIC(Fixed-term contracts and alternance training included)

414042

49

57

0

10

20

30

40

50

60

2005 2006 2007 2008 2009

No of arrivals No of departures Total at 31.12

2

- 30 -- 30 - - 31 -

As recruitment was mainly in the technical departments, where there are generally fewer women, a slight drop in the number of women has been observed.

The average age of employees remains overall fairly stable; the slight drop is due to the presence of two young employees on a training contract and professionalization contract.

AFNIC flow chart2009

The 2009 flowchart is identical to that of 2008. Stabilising the organisation has enabled AFNIC to clearly define the outlines of new departments in terms of responsibilities and expertise and therefore strengthen the most sought after staff.

31/12

/2005

31/12

/2006

31/12

/2007

31/12

/2008

31/12

/2009

%

Percentage of women employed on 31.12(Fixed-term contracts and alternance training included)

45

50

25

30

35

40

31/12

/2005

31/12

/2006

31/12

/2007

31/12

/2008

31/12

/2009

34

35

36

37

38

Year

Average age of employees on 31.12(Fixed-term contracts and alternance training included)

CEO Mathieu Weill

Legal Affairs and Registry Policy

Isabel Toutaud

Contractual relations •Registry policies•Legal assistance•

CTO Alain Caristan

R&D

Domain management

Design & Development

Customer services

Monitoring, Constraints,Operating

Secretariat GeneralMarine Chantreau

Accounts department •Human Resources •Purchasing and general •servicesPart-time secretarial staff•

Registry Operations Department

Philippe Renaut

Operational •Communications

Marketing / CommunicationLoïc Damilaville

Marketing relations •with RegistrarsRegistry development •Communication•Press relations•

- 30 -- 30 - - 31 -

AFNICAssociation Française pour le Nommage Internet en Coopération

ADRAlternative Dispute Resolution

ccTLDcountry-code Top Level Domain

CENTRCouncil of European National Top Level domain Registries

COREInternet Council of Registrars

DNSDomain Name System

DNSSECDomain Name System Security Extensions

EPPExtensible Provisioning Protocol

gTLDgeneric Top Level Domain

ICANNInternet Corporation for Assigned Names and Numbers

IDNInternationalized Domain Name

IETFThe Internet Engineering Task Force

INPI Institut National de la Propriété Intellectuelle French National Institute for Intellectual Property

INRIA Institut National de Recherche en Informatique et en Automatique French National Institute for Research in Computer Science and Control

IPv6 Internet Protocol version 6

Glossary

- 32 -- 32 - - 33 -

ISOCInternet Society

NICNetwork Information Center

OARCDNS Operations, Analysis, and Research Center

OECDOrganisation for Economic Co-operation and Development

ONSObject Naming Service

PREDECProcédure de résolution des cas de violations manifestes des dispositions du décret du 6 février 2007 Dispute resolution procedure for obvious breaches of the provisions of the Decree of Februay 6th, 2007

RegistryBody (association, company, etc.) in charge of managing the database of a TLD, or of IP addresses for a specified region.

RFIDRadio Frequency IDentification

RIPE-NCCRéseau IP Européen - Network Coordination Centre

TLDTop Level Domain

WhoisService for searching registry databases for information on a domain name or IP address

WIPOWorld Intellectual Property Organisation

WSISWorld Summit on the Information Society

- 32 -- 32 - - 33 -

www.afnic.fr - afnic@afnic.frImmeuble International - 78181 Saint Quentin en Yvelines Cedex - France

Phone: +33 1 39 30 83 00 - Fax: +33 1 39 30 83 01Siret: 414 757 567 00022 - APE: 6311Z - TVA n° FR 72 414 757 567

Copyright 2010 AFNIC

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