Phishing economy: Why tiny Tokelau is 3rd largest country domain

The number of registered Internet domains grew by 4.9 million to about 220 million names in the third quarter of 2011, a 2.3 percent increase, according to the most recent report released by VeriSign.

And in at least one notable case, phishing spam has driven the growth.

The fastest growth took place in the country code Top Level Domains, which collectively grew by 2.7 percent during the quarter. Among the country-specific domains, Brazil, Australia, Tokelau — an island territory of New Zealand — and the Russian Federation each grew at a rate of more than 4 percent during the quarter.

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Tokelau’s appearance on the list might seem surprising, except that earlier this year its .tk domain was identified as one of the major sources of phishing e-mails. A Dutch company owns the .tk domain and allows it to be used for free, Radio Australia reported.

The Phishing Working Group’s Global Phishing Report announced in April that the third largest number of phishing e-mails originated with the .tk extension. However, the phishing itself is coming from China, where hackers have illegally registered the domains, the group reported.

As a result, the country domain for Tokelau — which consists of three coral atolls covering about three square miles with a population of 1,400 and no airport or seaport — has become the third largest in the world.

VeriSign is the registry operator for .com, the largest generic Top Level Domain, as well as .net. These two gTLDs account for the bulk of Internet domains, with 112 million names registered. They grew by 1.8 percent during the third quarter.

Internet domain name growth could increase even more sharply by 2013 if current plans to expand the number of gTLDs begin as expected next month. This would expand not only the space in which secondary domain names could be registered, but also how they are used.

The expansion “could fundamentally change the way Top Level Domains are used and how organizations position their online identity,” the report says.

Not everyone is happy with the prospect of such changes. Users are worried that the expansion would create confusion and make it more difficult to locate resources, and owners of trademarks and brand names complain that they could be forced to spend millions of dollars defensively registering domains they do not need in order to protect them from online abuse.

Top Level Domains are the suffixes on URLs and e-mail addresses that appear to the right of the final dot in the address. Generic TLDs are broad categories that service large communities, such as businesses for .com, public service groups for .org, educational organizations for .edu, and government for .gov. There currently are 22 gTLDs and the Internet Corporation for Assigned Names and Numbers announced in June that it will open a three-month window for applications for the new gTLDs Jan. 12. The first new domains could be approved by early 2013.

Businesses have complained in congressional hearings that they already are forced to register domain names they do not use just to protect their brands within the existing universe of gTLDs. VeriSign reported that, currently, 88 percent of the 112 million registered domains in .com and .net resolve to a Web site, which means that more than 13 million registered domain names are not being actively used by their owners.

New categories of gTLDs are expected to include brand names, communities of interest, cities and geographic regions, industries, and service providers. Some of the gTLDs, such as brand names, might be delegated only within a company for internal use or use within a closed community of customers and contractors. Others will serve larger groups that could make the domains a primary destination within the community.

Although there are worries that the proliferation of domains could complicate the Internet, the creation of international TLDs using non-Latin alphabets and scripts is seen as a major step toward unifying the Internet. English has to date been the de facto official online language, and concern has grown that national, regional and ethnic interests could fragment the Internet by establishing their own domain systems supporting their own languages and alphabets.

New gTLDs now can be registered in any script or language, allowing the inclusion of these groups.

As of the end of the third quarter, the largest TLDs included four generic TLDs and six country code TLDs. They were, in order of size:

.com

.de (Germany)

.net

.uk (United Kingdom)

.org

.info

.tk (Tokelau)

.nl (Netherlands)

.ru (Russian Federation)

.eu (European Community)