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Has 'haven' for questionable sites sunk?

Last modified: August 4, 2003, 1:38 PM PDT
By Declan McCullagh
Staff Writer, CNET News.com
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LAS VEGAS--A widely publicized project to transform a man-made platform off the coast of England into a haven for controversial Web businesses has failed due to political, technical and management problems, one of the project's founders said.

Ryan Lackey, former chief technology officer of HavenCo, said on Sunday afternoon that he left the project because his business partners had become nervous about hosting objectionable material and were leading the company toward financial ruin, with only about six customers remaining.

"The key lesson on this is if you're going to put a 'co-lo' facility somewhere, political and contract stability in that jurisdiction is very important," Lackey said, referring to co-location setups, or virtual site-hosting facilities. "Customers want stability. They don't want the network to be down for two months." The 24-year-old Lackey spoke to an audience of about 600 at the DefCon hacker convention here.

A HavenCo representative disputed Lackey's characterization of the company's problems and said he was no longer in a position to know details about its workings. "We have a moderate-sized installation which is growing monthly, very many more than the alleged six customers and their servers in operation, and in the last eight months or so have been able completely to re-engineer our network and its international connectivity arrangements," the representative said in e-mail Monday.

When HavenCo launched in June 2000 to widespread press acclaim--including a cover story in Wired magazine--its founders promised to transform a windswept gun tower anchored six miles off the stormy coast of England into a co-location facility that would be a virtual home for businesses that were too controversial to place their servers elsewhere. The name of the company was derived from the concept of a refuge from governments around the world that have become increasingly interested in Internet regulation and taxation.

HavenCo is located on a rusting, basketball-court-size fortress erected by the British military during World War II to shoot down Nazi aircraft. Roy Bates, the quirky "crown prince" of "Sealand" landed on the abandoned platform in 1966 and claimed it as an independent nation with its own currency, stamps and flag. Although its legal status is unclear, Sealand lies within the territorial boundary of 10 miles claimed by England.

A Sealand representative said in an e-mail interview on Monday that "HavenCo is a viable operation. It is moving from strength to strength."

The representative said that "for our part, we would simply ask you to note that Mr. Lackey is no longer an employee of HavenCo...He does not at this time have a valid visa for return. We hope the confusion generated by his remarks can be cleared up in due course."

Lackey said, "Financial stability was getting questionable because we were spending more money and reducing demand. Then they started talking about taxing Sealand-hosted companies, and that was very interesting."

Lackey, who said HavenCo owes him $220,000 in cash and additional money in stock, said another problem was the Sealand family's tinkering with the network connection, which caused extended outages and occasionally left it dependent solely on a slow satellite link.

Lackey blamed what he described as HavenCo's impending demise on increasingly sour relations with Bates, Bates' son and royal heir-apparent Michael and the family's legal adviser, coupled with the family's increasing nervousness about their customers' activities after the Sept. 11, 2001 terrorist attacks on the United States. During an interview with the BBC, the family said it would readily "turn customer information over to the authorities if there was any serious problem with our stuff," Lackey said.

Bates, a former British Army major, has undertaken a string of failed business ventures in an attempt to profit from what he asserts is the world's smallest country. One Bates plan was to extend Sealand into a three-mile-long, man-made island with banks and its own airport. Another scheme included working with German investors to build a $70 million hotel and gambling complex--a scheme that fell apart after the Germans took over the fortress in 1978, and Bates regained control in a dramatic helicopter raid at dawn.

In an interview after his speech, Lackey said that the turning point of his relationship with the Sealand royal family was a meeting in London last year with Alex Tan, a Malaysian entrepreneur who ran the Film88.com Web site, which had been the target of legal action including a July 2002 suit filed by the Motion Picture Association of America.

Tan was prepared to pay HavenCo millions of dollars to host a Web site that would let customers stream movies from legally purchased DVDs, something that was not clearly illegal because only one customer at a time could view each stream, Lackey said. The Sealand royal family balked over the possibility of bad publicity, Lackey said. "I decided as soon as I got out of the meeting that I was going to quit," Lackey said.

HavenCo said on Monday that its acceptable use policy "stands as originally written. However it is the case that principality law forbids any act...which is against international law, linked with terrorism, or contrary to international custom and practice. These restrictions are in keeping with those found in any country."

Lackey is still listed as the "whois" administrative and technical contact for the havenco.com domain.

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