Pacific isle finances UN membership via the Internet

Nearly lost in the vast azure waves of the South Pacific is the small archipelago of Tuvalu.

It's the size of Manhattan, with the population of Martha's Vineyard, and only one national newspaper - published once every two weeks. Yet Tuvalu is now on equal footing with the major powers of this planet in one category: yesterday it became a full member of the United Nations.

Gaining admission to this club of independent nations was no easy feat. For years the admission fees - equalling about 1 percent of Tuvalu's annual budget - and the required annual UN contributions thwarted this tiny tongue of land in its effort.

But, ultimately, it was e-commerce that bought Tuvalu a seat at the UN table.

In the early days of the web, Tuvalu, like any country, was assigned an internet suffix, such as ".fr " for France or ".uk" for England. Its Internet domain name was bestowed ".tv", probably the most recognizable two letter symbol in the world.

Last November, Tuvalu negotiated a contract leasing its internet suffix ".tv" to a Californian company, dotTV, for more than $50 million in royalties over the next decade. With the money, Tuvalu gained the funds to become the 189th member of the UN.

"Membership fees had prohibited Tuvalu from joining the UN," says Koloa Talake, Tuvalu's former minister of finance. "The world's recognition of Tuvalu as an independent country has been made possible by the relationship with dotTV."

Island nations, faced with limited resources and long distances to major markets, have always looked for creative ways to generate revenue while reaffirming their independence. Some specialize in issuing stamps, others have become tax-heavens. UN officials say Tuvalu is the first nation to tap the blossoming New Economy to join the world body.

With the surge in e-commerce and internet connections, the number of recognizable addresses ending in ".com" or ".net" have become scarce and the race for new addresses has heated up. The suffix ".tv" has an obvious appeal to the television industry. Tuvalu gets $ 4 million every year from dotTV, which represents half of its annual national production. The deal also provided the nation with a 20 percent stake in the company dotTV, which will ensure steady revenue for its future.

"Like Saudi Arabia sitting on a bunch of oil, Tuvalu is sitting on ".tv",' says Lou Kerner, dotTV Chief Executive Officer. "It's a natural resource and Tuvalu wanted to make money out of it."

DotTV, now with the exclusive worldwide rights for web addresses ending in ".tv", has already licensed more than 10,000 addresses to companies around the world, like Sega of America or Columbia TriStar International Television. The annual registration fees for an address ending in ".tv" range from $50 for nongeneric names to around $100,000 for generic ones like "free.tv," which are auctioned.

Already 9 million addresses ending in ".com" have been registered. This year, it is estimated that 16 million new domain names will be registered with different suffixes. This number is expected to grow to 140 million by 2003.

Before the deal, Tuvalu's only sources of revenue were fishing and copra - the dried section of the meat of coconut, which is used in oil and soap. As of Aug. 1, dotTV has already paid $18 million to Tuvalu. This deal, Mr. Talake says, is transforming the nation. "People of Tuvalu are proud of the UN connection," he says. "With this income from dotTV, people from Tuvalu can now go around and see other parts of the world."

And attend the start of the UN General Assembly tomorrow.

(c) Copyright 2000. The Christian Science Publishing Society