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DNS: The Basis for Billions

In the midst of “Cyber Monday”, the day traditionally seen as one of the year’s busiest days for online shopping, it is only appropriate to examine the importance DNS plays for online economies. With DNS being at the heart of Internet connectivity it is easy to understand why DNS is important to the growing health of economies whose online health in dollars and euros rest in the billions.

While various online economies appear to be growing, doubts, activity and platform failures still hamper growth. Despite impediments to growth, trends indicate continued signs of growth for the global online economy.

By December 2008 the EU alone had 282.65 million Internet users, translating to 28% of the world’s Internet users. At that time the number of EU citizens who shopped online was 150 million. Adoption of online shopping is greater in some countries over others.

Another interesting trend is the growth of certain online applications, with banking being one such indicator. According to a study from APACS, the UK payments association, from 2000 to 2005 the number of online banking users in the UK grew 505% from 3.5 million to over 21 million users.

When we convert such numbers to money, in 2006 the EU’s online e-commerce market was valued at €106 billion, or $156 billion USD. However, it is interesting when we look at the projections for e-commerce growth. According to a recent Forrester study by 2014 the US’ online economy is predicted to reach $249 billion USD (or just over €190 billion) while the EU’s online economy is predicted to reach €114 billion (or just over $149 billion USD). The top three market drivers for each region’s respective online economies?

• Consumer electronics
• Apparel, footware and accessories
• Consumer hardware, software and peripherals

• Books
• Event ticketing
• Clothing

Another indicator regarding the growth of online commerce is illustrated in the amount of marketing budgets allocated towards online advertising. In the UK, the EU’s most active online market place, online advertisement overtook traditional TV advertisement for the first time. In this case for the first half of 2009 £1.752 billion (just over €2 billion and just over $2.7 billion USD) was spent on online advertising while only £1.639 billion was allocated towards traditional TV advertisement. Fast forwarding to the 3rd quarter of 2010, in a report by Price Waterhouse Coopers with information from the Interactive Advertising Bureau) Internet-based advertising in the US reached $6.4 billion USD alone (close to €5 billion), representing a 17% increase over the same period of 2009.

While the numbers seem strong there are still barriers to online trade, such as language, geographical segmentation and regulatory issues; such as VAT tax rules, distribution law and intellectual property protection. The EU Commission has been working to decrease the barriers. However, one such impediment to healthy online use has been that of uncertainty due to identity theft and threats from the malicious community. We have also seen where DNS platforms have failed due to heavy traffic spikes due to DDoS attacks.

Therefore while signs for the globe’s various online economies appear healthy and growing, doubts still impede adoption of what could be even healthier, more vibrant e-commerce economies. As such it is necessary for those who build DNS infrastructure, whether the corporate enterprise, hosting companies, ISPs and registrars, to remember the basics for providing for the most resilient form of DNS infrastructure, with those being:

1) An infrastructure incorporating diversity among DNS platforms which include a mix of open source and non-open source platforms.

2) A platform incorporating high levels of security, thus helping citizens develop greater confidence in benefiting from greater options, convenience and savings associated with online purchases.

3) A platform optimized for capacity so as to comfortably handle extremely large volumes of traffic without fear of an infrastructure collapsing under the weight of such levels of traffic.

Understanding the value the Internet would have on national and regional economies, having a DNS platform that embraced security and capacity while also providing platform diversity was felt essential to ensuring resilience. It is for those reasons CommunityDNS felt it necessary to build its own, non-open source platform.

So while today may be Cyber Monday, it is a good time to reflect on the importance of the billions of Euros and Dollars that circulate through the globe’s various online economies and the role DNS plays in the support of such economies. The economic indicators and trends signal strong and continued growth for online economies, but it is up to DNS and the various infrastructures to ensure design around security, capacity and resilience.

By Chuck Kisselburg, Director, Strategic Partnerships at CommunityDNS

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