OverviewEditorial: Responsible Change p. 12012 Highlights p. 3Assignments: to help develop a secure and stable Internet, open to innovation,in which the French Internet community plays a major role p. 4Governance: nomination of Board of Directors’ committees p. 5Strategy: responsibly manage the change requiredby the developments in our environment p. 8A dynamic .fr TLD despite a market slowdown p. 10Afnic commits to develop the .fr TLD and the Internet p. 13Afnic, the leading technical registry operator in France for new gTLDs p. 15Overview one year after the start of registrar accreditation P. 17Operational performance in line with increasingly high levels of requirement p. 19Identifying, qualifying and managing global risks p. 202012, laying the foundations of common tools for a secure and stable Internet p. 24Recruiting the talents required for the strategic redeployment of Afnic p. 28More services focusing on customer satisfaction, a priority for Afnic p. 31Afnic adopts accounting resources for its new business model p. 33Financial report p. 38Forward planning: Afnic’s Role in the coming years p. 40Editorial: Responsible Change p. 1Editorial: Responsible Change p. 12012 Highlights p. 32012 Highlights p. 3in which the French Internet community plays a major role p. 4in which the French Internet community plays a major role p. 4Governance: nomination of Board of Directors’ committees p. 5Governance: nomination of Board of Directors’ committees p. 5by the developments in our environment p. 8by the developments in our environment p. 8A dynamic .fr TLD despite a market slowdown p. 10A dynamic .fr TLD despite a market slowdown p. 10Afnic commits to develop the .fr TLD and the Internet p. 13Afnic commits to develop the .fr TLD and the Internet p. 13Afnic, the leading technical registry operator in France for new gTLDs p. 15Afnic, the leading technical registry operator in France for new gTLDs p. 15Overview one year after the start of registrar accreditation P. 17Overview one year after the start of registrar accreditation P. 17Operational performance in line with increasingly high levels of requirement p. 19Operational performance in line with increasingly high levels of requirement p. 19Identifying, qualifying and managing global risks p. 20Identifying, qualifying and managing global risks p. 202012, laying the foundations of common tools for a secure and stable Internet p. 242012, laying the foundations of common tools for a secure and stable Internet p. 24Recruiting the talents required for the strategic redeployment of Afnic p. 28Recruiting the talents required for the strategic redeployment of Afnic p. 28More services focusing on customer satisfaction, a priority for Afnic p. 31More services focusing on customer satisfaction, a priority for Afnic p. 31Afnic adopts accounting resources for its new business model p. 33Afnic adopts accounting resources for its new business model p. 33Financial report p. 38Financial report p. 38Forward planning: Afnic’s Role in the coming years p. 40Forward planning: Afnic’s Role in the coming years p. 40
“Responsible change” are the two words thatbest seem to describe Afnic’s achievementsin 2012.Change first of all, because it would be toour discredit, and even dangerous, to remainstatic in a global Internet environmentundergoing far-reaching transformations. Forexample, the forthcoming opening of the newgTLDs organized by ICANN will have animmediate impact on the market, and changethe entire environment for Afnic’s business. Itwill naturally lead us to expand our offeringsbased on a core business in which we haverecognized skills.Responsible because the process designedto turn market changes into businessopportunities must be selected and then implemented, taking into accountthe tasks that our Association was designed to carry out, first and foremostas the Registry for the .fr TLD.More than ever, Afnic is a responsible stakeholder committed to a secureand stable Internet, open to innovation, in which the French Internetcommunity plays a major role. It is in relation to that community, itsmembers and to the Government that the Association is responsiblefor managing the .fr TLD as a public resource, whether in terms of ourinvolvement in its development, funding or quality of service.annual report AFNIC 2012 01EditorialResponsible Change.Jean-Pierre DardayrolChairman of Afnic
2012 was marked by three major events:• Afnic’s contract as the Registry for the .fr TLD was renewed for a periodof 5 years. The trust shown in us is based on the far-reaching commitmentswe have made, including the implementation of a cost accounting systemfor the .fr TLD and the creation of a fund to support the development of theInternet (FSDI);• With respect to the new gTLDs, the Association succeeded inconvincing 17 French candidates of the quality of its offer, making usthe principal technical operator of French registries in terms of the numberof customers;• That development dynamic is complemented by the establishmentof a process of global risk management and enhanced governance,particularly with the appointment of Board of Directors’ committees (Financeand Risks, Registry Policy).2013 promises to be the year in which the policy options approved in 2012come to fruition. Creation of the Fund to support the development of theInternet (FSDI), insertion in the “root” of at least one of the new TLDs inwhich the Association is involved, wide-reaching initiatives to promote the .frTLD and transfers of R&D results: Afnic will remain central to the Internetand to the challenges facing all of our stakeholders, particularly in terms ofsecurity. 02 annual report AFNIC 2012
January 12: opening of the period forthe submission of nTLD applications toICANN.May 11: Afnic files its applications for themanagement of the .fr TLD and 10 otherFrench Overseas TLDs.May 31: end of the period for sendingapplications to ICANN for new TLDs.Theoffer as the technical operator of theAfnic registry is chosen by 17 Frenchprojects.June 22: publication by ANSSI and Afnicof Internet Resilience - 2011: situationreport.June 28: Afnic’s contract is renewed forfive years as the Registry for the .fr TLDby decree, issued by Ms. Fleur Pellerin,French Minister for the digital economy.July 3: IDN registration is open to all aftera sunrise period of three months.October 4 and 9: Registrar Days. Twodays to take stock with the registrarsof the major changes of the year anddiscuss prospects.October 29: the Paris Court of Appealconfirms that, with regard to theanonymity of Whois data,Afnic’s liabilitywas excluded, and that the associationwas not required to take protectivemeasures in respect of domain names incase of litigation.November 14: 60% of .fr domain namesare IPv6 compatible.December 1: entry into effect of thenew articles of association designed toenhance Afnic governance methods.December 6: domain names under the.fr TLD pass the 2.5 million milestone.December 10: Afnic extends its openinghours and sets up a 24/7 telephone clientsupport service.December 31: more than 20,000 zonesmanaged by Afnic are DNSsec signedzones.2012Highlightsannual report AFNIC 2012 03
04 annual report AFNIC 2012Founded in 1997 as an Associationgoverned by the provisions of theLaw of 1 July 1901, in 2012 Afnic wasdesignated as the Registry for the .fr TLD. Assuch, it ensures the governance and technicalmanagement of the top-level domain forFrance.Afnic also manages the other French TLDs:.pm (St. Pierre and Miquelon), .re (Reunion),.tf (French Southern and Antarctic Territories),.wf (Wallis and Futuna) and .yt (Mayotte).Its status as an Association allows Afnic toinclude government officials, registrars andusers in its governing bodies.Afnic’s purpose is to helps develop a secureand stable Internet, open to innovation, inwhich the French Internet community plays amajor role.It fulfills this goal through its assignments:to excel in the provision of essential resilientservices for the core Internet infrastructure inFrance, and to develop and share its expertisein order to facilitate the transition towards theFuture Internet.Ever since its inception, Afnic has responsiblymanaged the French TLDs that have beenentrusted to it. Involved from 2008 onwardsin the ICANN program to create new TLDs,Afnic has established itself as a major playerin France as a technical operator of registryactivities.True to its heritage as a “Network InformationCenter”, Afnic is also a skill center for Internettechnologies. It has an ongoing research anddevelopment program, performs knowledgetransfer and shares expertise with partnerslocated in France as well as abroad.Assignments: to help develop a secure and stable Internet,open to innovation, in which the French Internetcommunity plays a major role.
StructureThe composition of the Afnic Board of Direc-tors reflects the aim of its founders to involvegovernment officials, registrars and users inthe management of French TLDs to serve thepublic interest. The structure of the Board hasnot been modified since its inception.The chairman of Afnic is elected for a term ofthree years, renewable once. Representativesappointed by the State have five seats on theBoard, on a par with member representativeswho are elected for a renewable period ofthree years, i.e. registrars (2 seats) and users(2 seats). The president of the InternationalCollege, elected by its members, is by right amember of the Afnic Board of Directors. Afnictrustees receive no remuneration for theirduties.On December 31, 2012, the 119 membersof Afnic were distributed as follows:Distribution of Afnicmembers as at 31/12/20123 %4 %Founder membersRegistrars option 1Honnor membersRegistrars option 2Legal entitiesIndividualsInternational CollegeGovernance: nomination ofBoard of Directors’ committees.30 %18 % 8 %8 %29 %annual report AFNIC 2012 05
06 annual report AFNIC 2012Composition of the AfnicBoard of Directors as at De-cember 31, 2012Government officials appointedby the State:For the French National Institute for Researchin Computer Science and Control (INRIA)• Mr. Jean-Pierre Dardayrol (Chairman)• Mr. Stéphane Ubeda For the Ministry of Industry• Ms Mireille Campana For the Ministry of ElectronicCommunications• Ms Anne-Lise Thouroude For the Ministry of Research• Mr. Patrick DonathElected representatives per collegeFor the registrar college• ASCIO: Mr. Eric Lantonnet• MAILCLUB: Mr. Frédéric Guillemaut For the user college• ACFCI: Mr. Thierry Hinfray• ISOC France: Mr. Gérard Dantec For the International College• Conakry University: Mr. Abdoulaye DiakitéA government commissioner:Mr. Perica Sucevic, appointed by the Ministryof Electronic Communications.Movements in 2012:Appointed members:• INRIA: Mr. Stéphane Ubéda replaced Mr. Bruno SportisseElected members:• ASCIO: Mr. Eric Lantonnet replaced Mr. Peter CousynEnhancing internal controlIn 2012, Afnic significantly enhanced its in-ternal control system, in terms of governance(creation of Board of Directors’ committees),risk management (identification, qualificationand management of global risks, informationsystem security policy) and finance (implemen-tation of a new cost accounting system).These developments complement the cross-company actions already carried out overseveral years to define our quality, traceabilityand archiving processes, develop and monitorstrategic indicators, and evaluate customersatisfaction. More generally, the Association isengaged in a continuous improvement initia-tive allowing it to permanently ensure that itsoperating modes are consistent with recogni-zed best practices as well as with the applica-ble legislation.An innovation in 2012:the creation of Boardof Directors’ committeesThe establishment of Board of Directors’committees is an important development inits operation and in the ways in which Afnictrustees interact with permanent staff.The purpose of the committees is to assistthe Board of Directors in decision-making onissues affecting the life of the Association. The
members of each committee are responsible,within the scope of their remit, for organizingpolicy options and providing enlightenedinsight, advice and guidance to the membersof the Board in order to facilitate decision-making.Each committee is established by decision ofthe Board of Directors and mainly consists ofthree voluntary trustees. Upon request of theCommittee, other trustees of the association,Afnic employees or external experts may par-ticipate in certain activities.The two thematic committees created in 2012were:• The Finance and Risk ManagementCommittee, whose tasks include monitoringand analyzing financial documents; examiningthe suitability of the accounting methodschosen and their correct application;monitoring the proper implementationof internal procedures for collecting andcontrolling accounting data, and verifyingthe existence of internal control systemsand their proper application. At 31/12/2012the members of this committee were Mr.Thierry Hinfray (ACFCI) and Ms Anne-Lise Thouroude (Ministry of ElectronicCommunications) after the departure of Mr.Peter Cousyn (Ascio) who had not yet beenreplaced on that date.• The Registry Policy Committee thepurpose of which is to examine the existingpolicies and propose any changes; to identifywork priorities; to ensure compliance withany consultation process required prior toany vote by the Board of Directors; to ensureintegration of the interests and needs of theInternet community by Registry policies; andto analyze and comment on the preliminarydraft and draft registry policies. At 31/12/2012the committee members were Messrs. GérardDantec (ISOC France), Patrick Donath(Ministry of Research) and Frederic Guillemaut(Mailclub).In 2007 the Afnic Board ofDirectors adopted a Codeof Ethics which defines thefollowing commitments inparticular:• Duty to act in good faith:the trustees shall at all timespromote the attainment ofAfnic’s corporate purpose.They cannot take onresponsibilities, in any formwhatsoever, directly orindirectly, in companies orbusinesses that compete withthose of Afnic, particularly inthe form of advisory services;• Duty of professionalsecrecy and confidentiality:the trustees shall maintainprofessional secrecy andabsolute confidentiality withrespect to any documentor information of any kindobtained in the course ofor in connection with theperformance of their duties;• Conflict of interest: thetrustees shall refrain fromplacing themselves in asituation involving a conflict ofinterest between their personalor professional interests andthose of Afnic.The ethical rules of the Board of Directorsannual report AFNIC 2012 07
08 annual report AFNIC 2012Strengths and OpportunitiesAs the Registry for the .fr TLD, Afnic is arecognized market player for domain namesin France. The Association consolidated itsleading position in 2012 by providing its coreexpertise – that of a technical registry operator– to 17 projects for new gTLDs.In direct contact with the main market playerssince its inception, the Association is an inte-gral part of its ecosystem, as evidenced by thesix hundred-plus letters received in April andMay 2012 supporting its application to be desi-gnated as the Registry for French TLDs.The studies carried out annually show thatAfnic enjoys an excellent reputation with itscustomers, and that its active participation ininternational forums means it is recognized byits peers.In a market undergoing profound changescaused by the forthcoming production of hun-dreds of new TLDs and the developments inInternet usage, Afnic has key competitive ad-vantages enabling it to seize business opportu-nities as and when they occur. That ambitiousaim in turn implies the ability to develop itsbusiness lines and practices, ensure increasin-gly stringent risk management and enhance itsquality of services.Salient achievements of the2012 Action PlanEach strategic priority adopted by Afniccorresponds to a certain number of linesof action, each of which is subdivided intoactions. In 2012, the main achievements bystrategic priority were as follows:• Technical Registry Operator: Afnictook part in 17 projects for new gTLDs, builtcapacity to support them in the delegationprocess, and manage the gTLDs after theirinsertion into the DNS root at year-end 2013;• Preference for the .fr TLD: the marketshare of the .fr TLD significantly increased,reaching almost 35%; the Association wasdesignated as the Registry for the .fr TLD;the first commitments of the State / Afnicagreement were implemented;• Operational Excellence: excellenceprograms were defined and launched,preparations were made for the move (choiceof new premises);• Resilience: implementation of a secondDatacenter; the report on the Resilienceof the Internet in France was published inpartnership with the French National Agencyfor the Security of Information Systems(ANSSI); global risks were identified andqualified;Strategy: responsibly manage the changerequired by the developments in ourenvironment.
• Expertise and innovation: publicationsissued included Special Reports, continuationof research and development projects, the“technology backdrop” survey, and the AfnicIndustry Report on Domain Names.Afnic strategic priorities2012 - 2015For the period 2012 - 2015, Afnic has focusedits strategy on the following 5 priorities.1) Confirm the preference for the .fr TLDThe .fr TLD has a number of advantages: asthe French national top-level domain nameit creates a link with France, with French-lan-guage content, and with the French market.Asserting the preference of French users forthe .fr TLD a key strategic priority for Afnicaction, without excluding the opportunitiesprovided by the opening to Europe.2) Be the main technical operatorfor new TLDs in FranceThe market for domain names will undergosignificant changes with the opening of hun-dreds of new gTLDs from 2013/2014 onwards.By capitalizing on its core business, Afnic ispositioned as the technical registry operatorfor companies that have decided to backgTLD projects.3) Be a major player in the resilienceof the InternetAs a key infrastructure operator for theInternet, Afnic intends to play a leading role inoptimizing the resilience of the infrastructure,i.e. its ability to resist any form of attackor malfunction. The process of global riskmanagement fits into this context.4) Promote our expertiseAfnic teams have unique expertise coveringa wide scope of activities around its businesslines. Afnic aims to disseminate those skillsamong the Internet community at large, andintends to promote them in particular throughpublications, research and development pro-jects, and specific services.5) Be recognized for our operationalexcellenceAs the benchmark player in France, Afnicintends to serve as a reference on the nationaland international markets, whether in terms ofcustomer satisfaction, governance or the careerdevelopment of its employees. Afnic aims tohave that excellence recognized by indepen-dent third parties by 2015.ResilienceCertified ISO 27001 in 2014International recognitionInvestmentGrowthOperationalexcellenceEFQM400-500in2015Preference for the .fr10% of Afnic turnover investedin .fr promotionInnovationFSDI financed up to E2,5m per yearfrom 2015 onwards parRecognized profitabletechnical operator20-25 other TLDs, 15% of turnover,business profitable as of 2015annual report AFNIC 2012 09
10 annual report AFNIC 2012A rapidly changing globalenvironmentAnalyzing the Internet environment has resul-ted in the identification of a certain numberof developments occurring globally that areliable to fundamentally change the relationsbetween users of the “network of networks”.If only at user level, a report dated February2013 by the Cisco Company (1) indicated thatthe number of mobile devices used to browsethe Internet (smartphones, tablets, laptops,phones, etc.) should exceed the number ofhuman beings by the end of the year. Thisdevelopment, which could be clearly seen in2012, is a defining trend in terms of Internetcontent access and viewing modes.“Facilitation” of access to the Internet promo-tes the high-speed development of networksand social media. With 693 million monthlyusers, Facebook is the most popular socialnetwork in the world, far ahead of his challen-ger Google+ (343 million) and Twitter (288million). Between the three of them, however,these three giants represent over a billionmonthly users, according to a Trendstreamstudy (2).The social networking phenomenon, just asthe development of “Apps” on tablets and theconsultation of websites using mobile devices,are all emerging or affirmed uses that are lia-ble to affect user practices in terms of domainnames. Facebook and Twitter can both be usedwithout accessing other domain names thanthose of the two companies; “Apps” do notrequire any domain name at the user level;mobiles create specific constraints in termsof usability that can condition the format ofdomain names (as evidenced by the success of“URL shorteners”).Other developments are also technicallyremarkable, such as the deployment of IPv6,accelerated by the “exhaustion” of the availa-ble stock of IPv4 addresses. According to anarticle of the G6 France association publishedin November 2012 (3), measurements of IPv6A dynamic .fr TLD despitea market slowdown.(1) Mobile Internet devices ‘will outnumber humans this year’http://www.guardian.co.uk/technology/2013/feb/07/mobile-internet-outnumber-people(2) Google+ Passes Twitter To Become 2nd Largest Social Networkhttp://www.thedomains.com/2013/01/28/google-passes-twitter-to-become-2nd-largest-social-network/(3) 1% of Google users with IPv6http://g6.asso.fr/blog/2012/11/21/1-des-utilisateurs-de-google-en-ipv6/
traffic on the exchange point in Amsterdam(representative of a large part of Europeantraffic) showed that IPv6 traffic had increasedby almost three since June 2012 alone, repre-senting 0.35% of overall traffic on the dateof publication of the article. The same textmentioned that 1% of users accessing Googleservers used IPv6 connectivity, a figure whichis exponentially increasing: it stood at 4.6% forFrance (5.29% in early March 2013).The persistent if not increasing importanceof domain names in the functioning of theInternet is also evidenced by the build-up ofattacks targeting the DNS. Security has neverbeen so deeply rooted in Afnic minds andaction plans as in 2012. The deployment ofDNSsec is an example – often successful – ofthe leading role that can be played by nationalTLD Registries in adopting new technologiesand new standards.Faced with fast-changing uses and the growinglevel of danger in the Internet environment,domain names must increasingly demonstratethe “customer benefits” they provide. Thefuture creation of hundreds of new top andsecond-level domain names is an answer tothis problem, allowing the emergence of evenmore meaningful Internet addresses. But italso carries with it a complexity factor that willhave to be managed in order not to distractusers from the necessary and highly effectivetool of domain names as a means of “addres-sing” content on the Internet.Contrasting developmentsworldwideIn 2012 the market for domain names faced acertain degree of slowdown worldwide, with agrowth rate of 9% on average, against 10% in2011. The trends were also contrasted accor-ding to the nature of the name spaces, genericTLDs (.com, .net. etc.) suffering the most withgrowth limited to 3.4% (10.8% in 2011). In fact,the geographic TLDs or ccTLDs “drove” themarket the most with a 17% increase in thevolume of stock. However, this performancemasks a number of specific phenomena suchas the build-up of the .cn TLD (China, +90%)after several years of severe “purges”, theopening of certain TLDs such as .pt (Portugal,+28%) or the success of .co (Colombia, +25%)and .me (Montenegro, +14%) which achievedsignificant volumes by being marketed asgTLDs. Last but not least, the .tk TLD (Toke-lau) reached 8 million domain names in 2012because it is totally free.These “special situations” bias the assessmentsthat can be made of the actual dynamics of thedifferent types of TLDs. If we exclude the .tkTLD, the average growth of ccTLDs is closerto 11%, against 15% for the .fr TLD.The French market, reflectingincreased global dynamicsThe same phenomena observed worldwidecan be seen in France, but in an even morepronounced manner: the .fr TLD is growingstrongly (+15%), recuperating market sharefrom the other TLDs, including the .com,which lost more than 3% in volume.According to estimates crossing data from theAfnic base with those of the ZookNIC Compa-ny, the market share of the .fr TLD amountedto 35.94% at December 31, 2012 against 32.3%one year earlier. Nevertheless, the TLD mostfiled in the country still seems to be .com, with43% of domain names against 46% at year-end2011. Third position is held by .net (7% marketshare), followed by the TLDs .org, .eu, .info, .bizand .mobi.The dynamic growth of the .fr TLD since theend of 2011 can be explained in particularby several changes that took place during theperiod, including the opening of the extensionannual report AFNIC 2012 11
12 annual report AFNIC 2012to Europe in December 2011, and the com-plete opening of domain names with accentedcharacters from July 2012 onwards.According to these same estimates, the totalnumber of domain names registered in Franceunder the .fr TLD and the major gTLDsreached more than 7 million in December2012. In all, the .fr TLD increased by 320,000domain names in 2012 and crossed the 2.5millionth milestone for registrations, while.com lost 100,000 domain names over the sameperiod.Changes in domain namecreation and renewal ratesThe pace of creation and the renewal rate arethe two key metrics for assessing the healthof an extension. The graph below shows thetrend for the creation of domain names underthe .fr TLD is clearly on the upside, even ifit is subject to regular seasonal variations oraffected by more macro-economic events suchas the financial crisis. Afnic is all the morevigilant about this issue because of the closecorrelation between the number of new regis-trations and the number of start-ups.The renewal rate for the .fr TLD seems tobe following a downward trend comparedwith the levels for 2004-2006; this may beexplained by several factors, including theopening to individuals in 2006, which has hada downward effect on the renewal rate (indi-viduals give up their domain names more rea-dily than companies). Since 2006, individualshave represented approximately 50% of thenew registrations and 39% of holders at year-end 2012. The second visible factor in 2008-2010 was the economic crisis, which weighedheavily on budgets and encouraged companiesand individuals to give up unused names. Thegraph shows, however, that the renewal ratehas stabilized since 2011 at around 81%, asignificant level compared with those indicatedby Verisign for the .com and the .net gTLDs (ofaround 74%).Change in the total number of domain names createdwith the .fr TLD (2008 - 2012)Change in the renewal ratefor the .fr TLD (2008 - 2012)Januar0880 00070 00060 00050 00040 00030 00020 00010 000095 %90 %85 %80 %75 %2008 2009 2010 2011 2012April08July08Oct.08Januar09April09July09Oct.09Januar10April10July10Oct.10Januar11April11July11Oct.11Januar12April12July12Oct.12Januar13
When designated as the Registry forthe .fr TLD on June 30, 2012, Afnicsigned an Agreement with theState to formalize its commitments in the taskinvolved.The Association undertook to increase itsefforts to develop the .fr TLD, notably throughthe development of a 5-year Strategic Planwhich was submitted to the relevant Ministerfor approval, and a promotion budget cor-responding to 10% of the Registry’s turnover.Other scheduled actions include the launchbefore the end of 2013 of the possibility toregister domain names with the .fr TLD forseveral years, and to register domain namesconsisting of one or two characters. In addi-tion, the price for domain names under the .frTLD proposed by Afnic, which is already 20%lower than the .com, will fall by at least 5% bythe end of 2014. A survey carried out by TNSSofres in 2012 helped lay the groundwork forthe Strategic Plan.Another set of commitments involves main-taining an optimal quality of service. Thishas resulted in the publication on the Afnicwebsite of a monthly dashboard reporting onthe achievement of quality objectives alignedwith international best practices, as well as the24/7 availability of technical and operationalsupport staff, and an annual satisfaction surveyfor registrars on the quality of Afnic services.These three commitments were achieved in2012.A third category of commitments includesmeasures to ensure maximum levels ofsecurity and reliability. These include thedevelopment and implementation of a 5-yearstrategic plan to support the deploymentof DNSsec, an annual budget of 8% of theRegistry’s turnover for the acquisition ofhardware and software contributing to thesecurity and stability of the .fr TLD, and theallocation of 10% of the Registry’s turnover toresearch and development activities as well asexperience-sharing at the international level.Finally, Afnic has undertaken to set up a Sup-port Fund for the Development of the Internetbefore the end of 2013, and to contribute 90%of the net profit generated by the .fr TLD to iteach year. The total value of financing over thenext five years is estimated to be as high as8 million euros. The fund’s governance willbe independent, its purpose being to financeresearch initiatives focusing on the develop-ment of the Internet.Afnic commits to develop the .fr TLDand the Internet.annual report AFNIC 2012 13
The Support Fund for the Developmentof the Internet will receive an additionalcontribution of more than €1 million for theperiod from 1 July 2012 to 31 December 2013.The management and allocation of funds tocandidates will be entrusted to an umbrellaFoundation in accordance with the policyguidelines laid down by Afnic.The Fund’sfinances cannot be allocated to projectsrelated to business sectors in which Afnic isinvolved.FSDI 14 annual report AFNIC 2012Afnic is fully aware of the needs of rights hol-ders, and has therefore also proposed to pay150 euros (out of the total cost of 250 euros) toclaimants using the SYRELI dispute resolutionprocedures if the ruling is in their favor. Beforethe end of September 2013, an additionaldispute resolution procedure providing for theintervention of third parties will be set up byAfnic, in partnership with WIPO.
A process liable to radicallychange the domain namemarketEntrusted by the U.S. government with thetask of managing the DNS “root” system,ICANN announced in June 2008 in Paris itsdecision to launch an ambitious program tocreate new gTLDs. After several postpone-ments, the call for applications process wasfinally launched in January 2012.The official list of 1,930 applications receivedwas published on June 13 and the classificationorder of priority was drawn by lots on Decem-ber 17. Even taking into account the applica-tions for the same terms, and any objectionsto some of them by private individuals orgovernment authorities, we can reasonably an-ticipate the creation of a thousand new gTLDsin the two to three years to come. Now that themajor milestones have been identified (end ofthe objection period, signing of contracts, pre-delegation testing, etc.), the actual launch ofthe first new gTLDs should take place aroundthe third quarter of 2013. For many players,therefore, 2012 was a decisive moment in thepreparation of their projects.This phenomenon will lead to far-reachingchanges in the domain name market, all themore so in that for the new gTLDs, ICANNhas withdrawn the principle of “vertical sepa-ration” prohibiting registries from acting asAfnic, the leading technical Registryoperator in France for new gTLDs..PARIS 200 .SNCF 1076.BZH 204 .FROGANS 1209.LANCASTER 617 .AQUARELLE 1686.CANALPLUS 784 .LECLERC 1625.OVH 827 .BANQUE 1850.BOSTIK 869 .AQUITAINE 1840.TOTAL 870 .MUTUALITE 1862.ALSACE 1020 .MMA 1869.CORSICA 1030 Accreditation ranking of gTLD customersThe lowest number has the highest priority.Processing order of Afnic gTLD customers in the ICANN processannual report AFNIC 2012 15
16 annual report AFNIC 2012registrars and vice versa. This means the cardsare going to be redistributed among marketplayers, creating a vital issue for ccTLD Regis-tries as a result: they are going to have to keepup with the expansion of the generic exten-sion market in order to benefit from the sameeconomies of scale as their “gTLD” competi-tors and yet maintain international standard interms of quality of service.Based on that fact, since 2008 Afnic hasfocused on promoting its core business – thatof a technical Registry operator. The results ofthis strategic policy option are obvious: with17 clients, the Association is now the leadingFrench player in the new gTLD segment.The changes for Afnicmeant by the new TLDsAfnic has developed an offer to support itsgTLD customers both during the prepara-tion of their applications and during the laterstages, up to the technical delegation andthe subsequent technical management of theTLDs. These developments will change theAssociation’s business at several levels.Transition to a “multi-Registry” systemWhile continuing to act responsibly as theRegistry for the .fr TLD, Afnic will graduallyexpand its “portfolio” of TLDs, a change thatwill transform its information system andprocedures while allowing the association todiversify its sources of revenue.Alignment with international standardsAlthough Afnic’s “new gTLD” customers todayare all located in France, the working environ-ment is that of ICANN. The standards set byICANN contracts in terms of quality of service,security or process, are transformed de facto intointernational standards, which Afnic must satisfyand even exceed. A certain number of actionsinitiated as part of the commitments made withrespect to the .fr TLD in the State/Afnic agree-ment support the measures taken for the gTLDsand vice-versa, the level of synergies betweenthe assignments of the Registry and the activitiesof the technical Registry operator often beingvery high. The initiative involved in global riskmanagement or the preparation of the re-designof the billing system are good examples of thesesynergies.Adaptation of the structure and teamThe Afnic team is regularly reinforced by thearrival of new talent, allowing the Associationto absorb the additional workload caused bythe new gTLDs, and prepare for the future.This partly explains the number of recruit-ments made in 2012, as well as the investmentsin hardware and infrastructure.Customer diversificationSince its inception, Afnic had only one type ofcustomer i.e. registrars, who file their domainnames on behalf of their own customers. In2012, this situation expanded with the arrivalof customers backing gTLD projects, whoseneeds are different from those of registrars.The creation of “key account” managers isjust one of the changes necessitated by Afnic’spositioning on this new segment.
Overview one year after the startof registrar accreditation.Change in the number of Afnic registrars (2004 - 2013)The Law of 22 March 2011 changed certainaspects of the legal framework for domainnames in France: one of the changesintroduced by the new system includes therequirement for the .fr Registry to accredit itsregistrars.Afnic has set up an accreditation procedureand issued a practical guide for registrars.Launched at the end of 2011, the accreditationof registrars already active at the time of entryinto effect of the law ended in the first half of2012.One of the expected consequences of thischange has been a reduction in the number ofregistrars. Many “minor” players have prefer-red to become resellers for accredited bodies.The small volume of portfolios concerned hasmitigated the impact in terms of concentration.At 31/12/2012, there were 504 registrars ac-credited by Afnic, against 697 on 31/12/2011.The top 10 registrars accounted for 77% of thedomain names filed under the .fr TLD against75% on 31/12/2011.annual report AFNIC 2012 171/6/20131/12/20121/12/20111/12/20101/12/20091/12/20081/12/20071/12/20061/12/20051/12/20041/6/20121/6/20111/6/20101/6/20091/6/20081/6/20071/6/20061/6/20051 1001 0009008007006005004003002001000TOTALOPTION 2OPTION 1
The criteria registrars mustmeet to obtain accreditationare defined in French Decreeno. 2011-926 of 1 August2011.A registrar requestingaccreditation by Afnic mustdemonstrate that it:• Manages the principles andoperating procedures for theInternet domain name system;• Manages the equipmentand technical rules neededto register domain names withthe Registry;• Has set up a verificationprocedure for identificationdata provided by domainname applicants so that it mayanswer any questions of theRegistry;• Has the required humanand technical resourcesto ensure the updatingof any administrative andtechnical data provided bydomain name applicants foridentification purposes;• Has the required computerequipment and softwareto ensure the security ofpersonal data provided bydomain name applicants,and safeguards these datain compliance with therequirements of French Law78-17 of 6 January 1978;• can receive the public undersuitable conditions.Accreditation criteria 18 annual report AFNIC 2012
Through the State/Afnic agreement andthe ICANN contract, Afnic’s activitymust meet increasingly high requirementsin terms of quality of service. In turn, thismajor trend implies a far-reaching changein infrastructure and an improvement of theregistration chain. The phenomenon is furtheraccentuated by the development of the .frTLD and the DNS activity it supports.ImprovingperformanceThe performance of the registration chainis measured by the availability rate for thecreation of .fr domain names combined withthe lead-time for processing those operations.Its development is a perfect illustration ofthe difficulties encountered and the progressmade in 2012 in enhancing the chain and theinfrastructures involved: On-going deploymentof the Anycast networkThe deployment program for the Anycastnetwork continued in 2012 with the installationof a new node in London. The objective is toimprove performance through greater proxi-mity between .fr users and servers, as wellas enhance the overall resilience of the TLDthrough increased redundancy of its DNSservers.IPv6 operational underthe .fr TLDRecent measurements by Afnic (November2012) show that 60% of .fr domain names areIPv6-compatible, an increase of 19 points com-pared with 2011. Based on the figures releasedby Google, France is one of the most advancedcountries in terms of IPv6. Q1 Q2 Q3 Q4 Year 96.2% 93.4% 89.9% 97.6% 94.3%The rate was 98.4% in the first months of 2013.Operational performance in line withincreasingly high levels of requirement.annual report AFNIC 2012 19
Structuring global riskmanagement2012 was marked by the significant develop-ment of attacks targeting the DNS, especiallyattacks by denial of service (DoS). As a Top-Level Domain Registry, Afnic is one of theplayers potentially threatened by the threat,which should not be underestimated. Globalawareness has led to stricter requirements interms of security.These technical risks, however, are not theonly hazards with which a Registry such asAfnic may be confronted. The activities of theAssociation were transformed in 2012 withits designation as the Registry for the .fr TLDand the filing of applications for new gTLDs(changing it from a “mono-Registry” to a“multi-Registry”). As a result, conventionalregistrars now coexist with the future holdersof new gTLDs, linked by new types ofcontracts expressing new needs.To ensure the development of its activities issustainable and its objectives can be achieved,Afnic ensures the prevention and control ofthe risks to which it is exposed. In this respect,the Afnic Security Council is the structurefor the coordination of and cooperation in allactivities related to security.Analytical approachIn order to attain control of its global risks, in2012 Afnic implemented an identification andanalysis process of the main threats with whichit may be confronted. By continually upda-ting this repository, Afnic has deployed a riskmanagement system designed to eliminate orreduce the probability of their occurrence andmitigate their impact.The results of this global analysis were pre-sented to the Board of Directors in September2012. The objective is to address the risksidentified as being the most critical and havingthe greatest impact on Afnic activities. Actionplans have been defined and implemented as aresult. Monitoring the action plans will be partof the regular global risk review by the Boardof Directors.Constant vigilanceRisk management requires a global approachand the increasingly detailed integration ofall the existing and emerging vulnerabilitiesthat can interfere with the proper operation ofthe structure. This integrated approach to theoverall strategy of the company has become amajor factor affecting all of the organizationalprinciples, processes and practices used byAfnic. The Association’s commitments alsointegrate the principles of organization, actionIdentifying, qualifying andmanaging global risks. 20 annual report AFNIC 2012
and transparency based on a security cultureshared by its entire staff. These principles giverise to regular training and also integrate themanagement systems of the Association.Analyzing risks, deploying anaction planAfnic has produced scenarii to be applied toeach major risk, and set a timetable for action.Of the 132 risks currently identified, ten of themost critical ones will be addressed in 2013.The approachRisk mapping was performed with thefollowing objectives:• Identify all risks according to their impacton and occurrences in the strategic objectivesof Afnic,• Measure the importance of these risks inorder to define possible action plans to reduceor control them,• Develop a graphical representation of therisks according to their impact on Afnicactivity,• Give impetus to a process of organized riskmanagement,Typology and distribution of identified risksannual report AFNIC 2012 21CRITICALITYVULNERABILITYBlackRedYellowGreenLow Average High312108326367241830 strategic2 strategic0 strategic1 strategic1 strategic7 strategic13 strategic1 strategic1 strategic1 strategic2 strategic1 strategic0 external3 external3 external3 external2 external5 external9 external3 external0 external3 external10 external2 external3 internal7 internal7 internal4 internal0 internal14 internal14 internal3 internal1 internal1 internal6 internal0 internal
22 annual report AFNIC 2012• Encourage the development of internalcontrol reporting,• Encourage communication around businessrisks for the sake of clarity for shareholdersand the authorities.This groundwork has helped determinethe processes on which a global vision ofAfnic activity can be based, and accuratelyidentify the risks associated with our strategicobjectives.The risks have been analyzed from five pointsof view in particular:• Strategic risks,• Financial risks,• Operational risks (internal fraud, externalfraud, system security, customers, productsand business practices, damage to tangibleassets, business and system malfunctions,process deployment, delivery andmanagement, employment practices),• Compliance and reputation risks (legaland regulatory issues, risks of administrative,judicial, disciplinary sanctions, reputationalrisks, ethical risks),• Exogenous risks (hacking, malicious acts,etc.).Examples of risks included in the global risk repositorystrategic risks EXOGENOUS RISKSREPUTATIONAL RISKS FINANCIAL RISKSOPERATIONAL RISKS• Change in regulations• Change in competitive environment• Loss of a partnership• Competition• Terrorism / external malicious acts• Hacking• Etc.• Deficient media management of a crisis• Denigration• Non-compliance with ethical rules• Complaint against an executive• Malfunction of an admin- istrative or financial process• Deficiency of a partner• Fraud• Lack of governance• Etc.• Supplier / sub-contractor deficiency• Loss / failure of an information system• Loss of key personnel• Strike• Contractual commitments not met• Unavailability of basic services• Etc.
Because it is central to Afnic’s line of business,the Association’s information system requiredmore in-depth analysis: all of the conventionalissues involved in the audit of informationsystems have been covered.Afnic Security CouncilRisk management requires the establishmentof a governance and supervisory structure.The Afnic Security Council validates andsupervises the means implemented by Afnic toachieve its strategic security objectives:• Resilience of its systems,• Scalability / responsiveness to securityincidents,• Integrity of Registry data,• Availability of the registration chain,• Confidential treatment and non-commercialuse of personal data,• Physical security of the premises.The Security Council meets regularly, issuesrecommendations after incidents, checks theefficiency of the organization and the systemsused with respect to security.May - June• Approval by ExecutiveManagement of the global riskanalysis process,• Presentation to the trusteeappointed by the Board ofDirectors,• Implementation of thecontrol structure,• Scheduling of scopingmeetings,- Executive Management,- Security department,- Business Lines: all of thebusiness lines must take part inthis process. It seems necessary,however, to define an orderthat is best suited to theresponsibilities and constraintsinvolved,• Organization of the generalquestionnaire informingstaff of the process and theorganization of meetings,• Scheduling of analysismeetings with all of theparticipants.July• Preparation of briefs,• Organization of action plansper business line,• Preparation of internal andexternal communication.September• Finalization and identificationof priorities and presentationto the Board of Directors,• Launch of essential actionsfor the fourth quarter of2012. Mainly the immediatereduction of risks considered tobe major.November• Inclusion in the 2013 actionplan.Actions implemented in 2012 - Operational schedule for 2012annual report AFNIC 2012 23
24 annual report AFNIC 2012High-level R&D, in touch withour environmentThe Afnic R&D team is involved in manyfields. It monitors technological developmentsof the Internet, contributes to the work ofinternational bodies and carries out variousprograms designed to share team expertise.Technology Backdrop Survey:a glimpse into the futureThe results of the second “Technology bac-kdrop” survey were published in October2012. Overseen by the Afnic Scientific Counciland carried out by the INIT Company, thesurvey sought to find a common vision oftechnology trends. Based on forecasts madeby Internet professionals and users, the surveyindicates in particular that over the next tenyears media such as tablets, smartphones andTV will definitely take precedence over desk-tops or phones for Internet access.Create standards for measuring the resilience ofthe Internet – the Internet resilience observatory inFrancePublished jointly by Afnic and ANSSI in June2012, the report aims to provide a number ofindicators – from the Border Gateway Protocol(BGP) and DNS points of view – and to makean initial assessment of the level of resilienceof the French Internet. The initial results obtai-ned underlined the fact that the French Inter-net is well placed in terms of resilience. Afnic’sapproach is inspired by the four years of theSwedish model, plus the results of the asso-ciation’s own experience. Ultimately, Afnic’sobjective is to allow the entire community tomeasure the resilience of the Internet on thesame basis and the same criteria.A new standard for the Internet of ThingsThe result of international cooperationin which GS1 France and Afnic played aleading role, the new version 2.0 of the ONSstandard (Object Name Service), also knownas the Federated ONS, was ratified and thenpublished in December 2012. GS1 Franceand Afnic wish to continue their efforts tosupport the ecosystem of the Internet ofThings in adopting the ONS. Access toadditional product information (“ExtendedPackaging”), identifying a product’s originand enhancing its traceability, fighting againstcounterfeiting or organizing product recall area few examples of the use of ONS in logisticsand the supply chain. The ONS standard ishelping the emergence of a new generation ofservices for consumers and businesses.The selection and monitoring of Afnic R&D projectsOne of the underlying principles of AfnicR&D, laid down as of its inception in 2007, isthat its objectives must be in line with Afnic2012, laying the foundations of common toolsfor a secure and stable Internet.
Afnic is involved in thework of many internationalorganizations on a wide rangeof issues including:• The governance of theInternet (ICANN, CENTR, Forumfor Internet Governance, etc.),• The drafting of technicalstandards and protocols: IETF(“Internet Engineering TaskForce”).Afnic was a partner inits 83rdCongress in Paris from25 to 30 March 2012,• The management of IPservices (European IP networks(RIPE),• The management ofproblems and incidents relatedto the security and stability ofthe DNS (DNS-OARC).Afnic also supports:• The New GenerationInternet Foundation (FING),which helps companies,institutions and local authoritiesanticipate changes related totechnologies and their uses,• The Internet Society (ISOC),whose role is to promotethe development, evolutionand use of the Internet forthe benefit of all peoplethroughout the world,• The development of the BINDsoftware used by most of theDNS servers.An association open to the worldstrategy and resources as defined during thepreparation of the annual budget, with multi-year forecasts for projects lasting more thanone year.The typical life cycle of an innovative projectusually starts with the production of ideas. AtAfnic, this process starts informally first of allwith continuous input by electronic means toa shared suggestion box. The suggestion boxis periodically consolidated, especially duringso-called “brainstorming” meetings to whichall the stakeholders in innovation (R&D,Marketing, Operations, etc.) are invited, andideas for potential innovations are identified.A pre-selection of ideas is then made based onan initial set of criteria (strategic, market, feasi-bility, budget, etc.), which are then submittedto in-house evaluation and arbitration by anexecutive committee, in line with the exercisesfor developing Afnic strategy, action plans andannual budgets.The annual R&D action plan resulting fromthis process is then presented to the AfnicScientific Council before being approved andendorsed by Afnic executive management andthe Board of Directors as part of the annualaction plan.Once a project has been launched, throughoutits life cycle, a progress report is regularlyproduced in-house, in the course of periodicreviews of the action plan and during mee-tings of the Scientific Council. These regularassessments allow the R&D team to continue,modify, or if appropriate, abandon projectswith good reason in each case.Finally, each completed project is subject to adetailed assessment, with particular emphasison its actual spin-off and possible knowledgetransfer thereafter.annual report AFNIC 2012 25
26 annual report AFNIC 2012The Afnic InternationalCollege,a vector forco-developmentBacked by a non-recurring contribution fromthe French Ministry of Foreign and EuropeanAffairs, in 2012 the International College Fundprovided €200,000 of support for projectsdesigned to:• Reinforce the Internet infrastructure inAfrica through the development of academicinterconnection networks,• Improve marketing, promotion and distribu-tion practices for domain names and relatedservices,• Strengthen the resilience of the African In-ternet by helping African Registries to benefitfrom the Anycast service operated by AFRI-NIC (the Africa Network Information Center)allowing them to improve the resolution ofdomain names,• Strengthen the operational capacity of staffworking in African registries,• Finance individual support grants so thatAfrican staff can participate in importantevents for the governance of the Internet.For recipients that resulted in:• Capacity building,• 3 training courses under the auspices of theAFTLD with the support of the NSRC in Oua-gadougou (Burkina Faso), Livingston (Zambia),and the AFTLD in Khartoum (Sudan),• 1 Information Society training course inBrazzaville, Congo,• 10 Fellowship grants to take part inInternet events: 2 for ICANN44 (Prague)and ICANN45 (Toronto), 6 for EuroSSIG(European Summer School on InternetGovernance, in Meissen, Germany) and 2 totrain ccTLDs on communication.6 grants forEURO-SSIG training (European SummerSchool on Internet Governance) in Meissen(Germany), 2 for SDLI training (Congo),• Support for the development of nationalnetworks dedicated to technology,teaching and research,• iRENALA, Madagascar,• RITER, Côte d’Ivoire,• Strengthening the resilience and quality ofservice of the Internet in West Africa,• Implementation of 2 Anycast nodes for thecloud of the L server of the Internet root,• Implementation of an Anycast node for theDNS server for the .ci TLD (November 2012).
An integral part of theAfnic program, the Fund isadministered and managedby the Fund committee andthe Fund director.The Fundcommittee is the decision-making body that overseesthe Afnic International CollegeFund, both in terms of strategicpolicy options and in theallocation of subsidies.The composition of the FundCommittee is as follows:• The president of the AfnicInternational College Fund;• The Afnic CEO;• The director of the Fund;• Two members of theInternational College,appointed by the president ofthe International College for aterm of three years.The director of the Fund isappointed by the presidentof the Afnic InternationalCollege further to a proposalby the Afnic CEO.The directorof the Fund and his/her teammanage the Fund of the AfnicInternational College on adaily basis and implementthe decisions of the Fundcommittee.They are the“main contacts for projectmanagers.”The Fund committee anddirector may be assistedby independent expertsselected on the basis ofcriteria established bythe committee.They areresponsible for providingadvice on the technicalquality of the projects receivedand their relevance in termsof achieving the Fund’sobjectives, based on a setof criteria approved by thecommittee.The details of thematrix are available online (1).Managing the International College Fund(1) Guide for Proposers: http://www.afnic.fr/medias/documents/College_International/Fonds_du_College/FCI2013/afnic-fonds-ci-guide-proposant-2013.pdfannual report AFNIC 2012 27
28 annual report AFNIC 2012A fast-growing teambonded by Afnic valuesAfnic developments have led the Associationto work on different areas in Human Resour-ces, such as policies for recruitment, training,skills management, and actions designed topromote employee development. One policyfocuses on change management, through aredefinition of the Association’s values as wellas a number of actions designed to informthe team about the overall strategy in orderto strengthen internal cohesion. Satisfactionsurveys have been carried out with employeesand a “team building” seminar was held inNovember. Similarly, employees have beenclosely associated with the process of choosingthe location of the future premises of Afnic.2012,a landmark yearin terms of recruitmentTo meet the needs resulting from its newactivities, Afnic hired ten new recruits withvarious technical, legal and administrativeprofiles. 10 other recruits are already on theagenda for 2013. These new recruits weregiven an induction to ensure they joined theteam under optimal conditions. Special effortswere also made to facilitate the flow of infor-mation in-house and to ensure each employeehas a good understanding of his/her rolewithin the team.Recruiting the talents requiredfor the strategic redeployment of Afnic.Development in the number of employees(including fixed-term contracts and cooperative training)ArrivalsDeparturesTOTAL AS AT 31/12End 2008 End 2009 End 2010 End 2011 End 20127065605545504030352520151050114957 5561 67612 101048 6 42
Setting-up a time savingsaccountThe introduction of a time savings accountnow allows employees to accrue paid leave orreceive compensation, immediate or deferred,in return for periods of leave or rest not taken.Signing of the new wageagreementAs part of the Compulsory Annual Negotia-tions, a new wage agreement was signed inDecember (effective in 2013) essentially settingup a bonus objective system for all employees.Training,an asset for Afnicperformance and that of itsemployeesAfnic considers training to be a major focus forits policy of Human Resource management.Each year the Association spends more than3% of its payroll on continuing vocationaltraining programs.Afnic applies an ambitious training policy inline with its strategy, with developments indomain name services and with technology.The policy is also designed to develop theskills of Afnic employees and promote theiremployability.• Constant acting every day with integrity,• Using our skills to serve the Internet community,• Making people the focus for our work,• Forming a team to help achieve a common good: the Internet,• Facing change with determination and resolve.Afnic valuesTeam facts and figuresAverage age of employees as at 31/12/2012annual report AFNIC 2012 29363738394002008 2009 2010 2011 2012
30 annual report AFNIC 2012Percentage of women in headcount as at 31/12/2012Distribution of employees by seniority as at 31/12/2012Distribution per busines line/activity9 %7 %LegalR&DAdministrative & financialCommunication, marketing,& salesCustomer serviceIT & developmentsTransversal10 %16 %13 %7 %36 %30 %25 %20 %15 %10 %5 %0 %< 6 months10 %19 %25 %15 %13 %16 %6 months -3 years3-5 years5-10 years10-13 years>13 years50 %40 %30 %20 %10 %0 %200838,8 %36,5 %200920102011201241 %34 % 35,6 %
In order to satisfy the needs of its customersand the Internet community, Afnic conti-nued its efforts in 2012 to expand or qua-litatively improve its range of services. Thisstrategy was materialized by the extension ofopening hours for the helpdesk or the imple-mentation of the SYRELI dispute resolutionprocedure (opened in November 2011). A newsatisfaction survey with accredited registrarshas confirmed their high level of satisfaction.Afnic’s helpdesk is nowavailable 24/7The transformation of the customer serviceinitiated in 2011 continued in 2012 with theset-up of a telephone helpdesk open 24/7. Thebilingual service is available in French and En-glish, and provides advice and expertise regar-dless of the location of callers. The extensionof the service’s opening hours responds to thecommitment made by Afnic as the Registry forthe .fr TLD.SYRELI: results after one year ofexistenceThe platform implementing the Syreli disputeresolution procedure opened on November21, 2011. It applies both to the .fr TLD and tothe other top-level domains managed by Afnic(Mayotte, Reunion, Saint Pierre and Mique-lon, the French Southern and Antarctic Terri-tories, Wallis and Futuna).At the end of its first year of existence, 157Syreli claims had been filed, and 138 deci-sions had been handed down by Afnic. Therehas been a gradual acceleration in its use,with values approaching or exceeding twentyrulings per month since the summer of 2012.This trend shows that an increasing number ofMore services focusing on customer satisfaction,a priority for Afnic.Development in of the number of SYRELI rulingsannual report AFNIC 2012 3109/12 10/12 11/1208/1207/1206/1205/1204/1203/1202/1201/201212/201112/201210 101091518212422111552
32 annual report AFNIC 2012rights holders know about the procedure anddo not hesitate to use it.Claimants request the transfer of the domainname in question in most cases (93%); only7% of them request the deletion of the namewithout any transfer. After the Syreli proce-dure, two-thirds of the claimants’ motions wereaccepted by the Afnic College, the other thirdbeing refused.Scope,a new source ofinformation about SYRELISince October 2012, Afnic has provided itscustomers with a new statistics graphics sup-port. Accessible on the Afnic website (underthe “Dispute resolution” heading), the purposeof Scope on Syreli is to summarize the pro-cedure’s data and disseminate them as widelyas possible.Registrar satisfactionindex still very highAs every year, in 2012 Afnic conducted an ex-tensive survey of its registrars in order to knowtheir expectations and their assessment of thequality of its services.Carried out by the INIT company, the 2012survey indicates a particularly high level ofsatisfaction of 97% (against a median of 90%in the business services sector), an increaseof 5 percentage points compared with 2011.This performance is largely due to a two-sidedeffort, on the one hand to expand the rangeof services, and on the other to continuouslyimprove the quality of the existing services. Italso illustrates the very positive impact of theestablishment in 2011 of customer relationshipmanagers, who are highly popular among re-gistrars because of the greater proximity theyrepresent.The main expectations identified in 2012 relateto the management procedures used to deployDNSsec, the ease of finding information onwebsite and the procedures involving emailvalidation of the registrar and/or holder.Breakdown of decisions based on theoutcome of the SYRELI procedureWhat is your overall levelof satisfaction with Afnic?65%35%of applicants’claims grantedHighly satisfied% of satisfiedcustomers: 92 %% of satisfiedcustomers: 97 %Fairly satisfiedFairly dissatisfiedHighly dissatisfiedof applicants’claims refused150Global 2011(raw data)Global 2012(raw data)13734 %58 %5 %3 %42 %55 %3 %
Responsible managementAfnic has always managed its resources takingthe least possible risk. The creation of a “Re-serve fund” designed to represent one yearof payroll and occupancy costs is part of thatsound and prudent approach to manage thefunds entrusted to the Association through theoperation of the .fr TLD.The level of cash reserves reached todayreflects the results of this management strategy.It provides Afnic with the financial means totake whatever action is required to satisfy thecommitments it has undertaken as part of itsassignments as the Registry for the .fr TLD,and the policy options it has adopted in orderto respond to the changes in its environment.What changed in 2012Two parameters in 2012 fundamentallychanged the way in which Afnic manages itsresources: the Implementation of a new costaccounting system to clearly identify the flowsrelated to the .fr TLD on the one hand, andsecondly the commitment to contribute 90%of net income generated by .fr business to theSupport Fund for the Development of theInternet.It is preferable to precisely isolate the financialflows (resources, expenditures, investments)related to the activity of a registry under a spe-cific mandate entrusted by the State, from thefinancial flows generated by the other activitiesof the Association, including the new gTLDsin particular.The changes came into effect on July 1, 2012,after Afnic was designated as the Registry forthe .fr TLD on June 30. The 2012 financialperiod is therefore special in that it comprisesa first half-year under the old framework, anda second half under the new context definedby the State/Afnic agreement.Cost accounting: principlesand methodologyThe cost accounting system implemented isdesigned to establish an income statement foreach family of TLDs as defined above, recoun-ting the revenues and expenses allocated toit. An analytical section corresponds to eachof the three categories of families of TLDs (.fr,overseas TLDs, gTLDs).Allocation principlesThe allocation technique consists inestablishing:• The causal relationship between costsincurred directly (costs directly attributableAfnic adopts accounting resourcesfor its new business model.annual report AFNIC 2012 33
34 annual report AFNIC 2012to a single TLD) or which are common(transverse costs involving at least two TLDs),and a TLD,• The causal relationship between direct andcommon income, and a TLD.Direct income and expenses (except incometaxes and profit-sharing) are the income andexpenditure directly attributable to a TLD.They are recorded in the analytical section ofthe relevant TLD or family of TLDs previous-ly defined.Allocation keys for common income and expenditurerecognized in analytical cross-sectionsFor common income and expenditure, thecausal relationship is not linked to a lone TLD.For this reason, allocation keys are identifiedand assigned to the identified cross-sections.Since Afnic’s activity consists in managingdomain names regardless of the TLD invol-ved, the allocation key according to the size ofthe portfolio of domain names can be used tofairly assess the share of Afnic resources usedby each TLD. For the TLDs already open forregistration, i.e. the .fr TLD and the OverseasTLDs, the number of domain names managedat the end of the financial period (31 Decem-ber of year N) seems to be the allocation keywhich most accurately represents the Associa-tion’s activity.For the TLDs that are not yet open for regis-tration, however, the key cannot refer to thenumber of domains managed, and a 3-yearestimated cost is therefore used. This is be-cause a great deal of the work involved in re-designing the information systems and variouschange support costs incurred by Afnic sincemid-2012 will eventually be applied to TLDsother than those currently managed by Afnic.The main principles of the cost accountingsystem are therefore as follows:• The allocation key chosen between the dif-ferent TLDs open and managed by Afnic (.frTLD and the Overseas TLDs) is the number ofdomain names at 31/12/N, preferably in salesor time spent;• A 3-year estimated cost for domain names ispreferred for “preparing for the future” costs,also covering the TLDs not yet open (gTLDs);• The figures used are based either on Afnicdata as provided in its applications to callsfor tender for the selection of Registries oron the statistics provided by Afnic’s variousgTLD customers in applications submitted toICANN (Q48a);• Costs common to all the TLDs managed byAfnic are allocated according to a compositekey based on the time spent by employees oneach of the categories, payroll being the maincost in the Afnic income statement.Contribution to the SupportFund for the Development ofthe Internet: mechanisms andforecastsThe agreement between the State and Afnicwas signed on 9 July 2012. The agreementprovides for financial obligations, includingthe transfer of part of the earnings from the.fr TLD to the Support Fund for the Develop-ment of the Internet.On April 18, 2013 the Board of Directorsadopted the methodological note that will beused to determine the earnings of the .fr TLD.The Agreement having been signed July 9,2012, the analysis of financial obligations wascarried out from July 1, 2012 to 31 Decem-ber 2012, and not by reference to half of theannual results for 2012. In this way, for the pe-riod of 1 July 2012 to 31 December 2012, theamount of the transfer to the Support Fund for
the Development of the Internet, recognizedas an expense and deducted for tax purposes,amounted to e165,238.Aggregated with the earnings for the 2013financial period, the sum will be paid at theend of the 2013 fiscal year to the FSDI ac-count, held by a foundation recognized to beof public interest.Comments on the 2012financial statementsA strong upswing of growth in turnoverWhile growth in net turnover has tended todecrease in certain years, the 2012 financialperiod was marked by a strong upswing insales revenue to over €13m, i.e. an increase of20.3%. This growth can be explained by twocombined factors:• The drive of the .fr TLD, with some 15%growth in the number of domain names ma-naged, due in particular to the opening of the.fr TLD to holders throughout Europe, and toa lesser extent by the opening of IDNs in July2012;• The contribution of gTLDs (correspondingto the filing of 17 applications for which we arethe technical operators)It is worth noting that the decrease in registrarfees forecast due to the implementation ofaccreditation under the .fr TLD, has resultedas expected in a drop of 17% in the relatedincome.Growth in costs on line with the budget voted by theBoard of DirectorsOn a like-for-like basis, i.e. excluding theFSDI, operating expenses totaled more than€11.25m, up 14.8% compared with 2011. Thisincrease is consistent with the budget appro-ved by the Board of Directors €11.2 million).It is due to:• The growth in wages and salaries (14.45%),reflecting the increase in the size of 63.4 full-time equivalent jobs in 2012 against 56.5 in2011;• A high level of use of outside services for ITprojects and developments, as well as changemanagement (gTLDs, Next);• The increase in costs related to Datacenterhosting. Due to the timing of the acquisitions(concentrated in the last quarter), the effect ondepreciation expenses was not very significantin 2012.For the second half, most of the commitments of theState Afnic Agreement were heldThe State/Afnic agreement lists the commit-ments for Afnic, some of which can be verifiedin the financial statements.For the second half of 2012, these commit-ments were met for:• R&D and transfer actions (12.7% of turnoverfrom the .fr TLD for the half-year, for a targetof 10%)• Investments in the security of the .fr TLD(18% of turnover from the .fr TLD, for a targetof 8%).• Training costs (4.3% of payroll for a target of3%).• The transfer of 10% of profit, within the mea-ning of the Agreement, to the precautionaryreserve.In general, all discrepancies, whether up ordown, between Afnic’s commitments and theirimplementation in the financial statements willbe smoothed during the term of the Agree-ment.Finally, the amount payable to the futureFSDI under the State/Afnic Agreement was€165,000k. The amount is linked to the seaso-nality of Afnic sales, which are increasinglyimportant in the first half.annual report AFNIC 2012 35
36 annual report AFNIC 2012gTLD business has accelerated withthe filing of applicationsNet income for the year rose sharply to €1.1million (€1.3 million before FSDI) against€770,000k in 2011. This profit before FSDIrepresents just under 10% of sales against7.1% in 2011 and 8.1% in 2010. Thanks to thispositive result, the reserves of the Associationremain above the management objective. Thissound situation is needed in order to prepareAfnic for the far-reaching changes to come inits business model, including the transfer ofmost of the income from the .fr TLD to theFSDI on the one hand, and the continuedinvestment in gTLDs on the other, since theirwide-scale launch will probably not take placebefore 2014.Change in operating income (e million)Change in operating expenses (e million)14121210108866442200Ex. 2008Ex. 20086,7176,4478,3297,6029,8238,76410,9169,79813,1711,417Ex. 2009Ex. 2009Ex. 2010Ex. 2010Ex. 2011Ex. 2011Ex. 2012Ex. 2012
Change in intangible and tangible assets in e thousandStructure of Afnic resources in 2012 Reminder 201160,5 %62 %8,9 %5,2 %3,1 %0,7 %4,4 %0,6 %26,8 % 27,9 %Membership/fait feesMaintenanceCreationsMiscellaneousSubsides forprojectsChange in operating profit (e million)2,0001,7501,5001,2501,0000,7500,5000,2500Ex. 20080,2700,7271,0601,1181,753Ex. 2009 Ex. 2010 Ex. 2011 Ex. 2012annual report AFNIC 2012 371 4001 2001 0008006004002001 6000Ex. 2008Ex. 2009Ex. 2010Ex. 2011Ex. 2012418 5841 386975932
Simplified income statementIn € thousand 31/12/2012 31/12/2011Turnover 13 034 10 832Other income 136 84Operating income 13 170 10 916Other purchases and external expenses 4 383 3 744Duties, taxes and similar payments 390 312Salaries, wages and payroll taxes 5 588 4 888Other expenses including depreciation 1 056 854Operating expenses 11 417 9 798Operating profit 1 753 1 118Financial income 204 148Financial expenses 0 0Net financial income 204 148Income before taxes 1 957 1 266Extraordinary income 113 135Extraordinary expenses 211 251Extraordinary profit or loss -98 -117Employee profit-sharing 194 111Income tax 557 267Profit or loss 1 108 770annual report AFNIC 2012 39
Forward planning: Afnic’s Rolein the coming years. 40 annual report AFNIC 2012Overview of objectivesfor 2013For Afnic, 2012 was a year in which we confir-med our status as a Registry, and assertedour new policy options. 2013 promises to bea period in which these initial results will beborn out.Firstly, this will be through the implementa-tion of the various commitments of the State/Afnic Agreement, which provides for theinstallation of a second Datacenter this year,as well as through our security accreditation, amore important role for the Association in thedeployment of DNSsec in France, the openingof registrations of domain names with twocharacters, and finally with multi-year domainname registration.The development of the .fr TLD (implemen-tation of the marketing plan presented forapproval to the Board of Directors) and thecreation of the Support Fund for the develop-ment of the Internet are among the key objec-tives for Afnic in 2013.Strong support for customers backing newgTLD projects should result in 2013 in theinsertion of at least one of these new gTLDsinto the root managed by ICANN.Finally, the reduction in global risk is one ofthe major aims of the Association this year,which is part of a long-term policy, as are ouractions in terms of quality and continuousimprovement.Mathieu WeillAfnic CEO
Market trendsThe opening of the new gTLDs is the majorunknown factor in the medium term as far asforecasts about the development of the domainname market are concerned.In all likelihood, however, its impact will bemoderate in 2013, since most of the TLDs willbe inserted into the root from the summeronwards at the earliest, and the first commer-cial launches will not take place before the endof the year.We can expect, however, that the cardswill continue to be shuffled by stakeholderswishing to position themselves to take advan-tage of the explosion expected in 2014.Security issues in turn should continue togrow, making the approach developed byAfnic all the more necessary.As far as we can tell, the strategy defined andimplemented today is allowing the Associationto make the most of the business opportunitiesthat occur, our approach being based as everon our responsibility with respect to the State,to our customers and to the Internet commu-nity in general.annual report AFNIC 2012 41