The Ultimate Colocation Site: HavenCo Avi Freedman Avi Freedman Ryan Lackey Ryan Lackey H2K2 14 July 2002

The Ultimate Colocation Site: The Ultimate Colocation Site: HavenCoHavenCo

Avi Freedman <avi@havenco.com>Avi Freedman <avi@havenco.com>

Ryan Lackey <ryan@havenco.com>Ryan Lackey <ryan@havenco.com>

H2K2 14 July 2002H2K2 14 July 2002

http://www.havenco.com/http://www.havenco.com/

Sealand Sealand

Present StatusPresent Status

Profitable .comProfitable .com Cost-consciousCost-conscious No negative legal challenges; working on bigger No negative legal challenges; working on bigger

teststests Connectivity redundant and has sufficed but Connectivity redundant and has sufficed but

working on fiberworking on fiber Mainly gaming and payment systems customersMainly gaming and payment systems customers Need businesses to do:Need businesses to do:

– Shared hosting; email; data haven?Shared hosting; email; data haven? Out of the startup phase with steady growthOut of the startup phase with steady growth

Why?Why?

Continued trend toward regulation around Continued trend toward regulation around the worldthe world

Specifically, CDA, RIP, DMCA, CALEA, Specifically, CDA, RIP, DMCA, CALEA, BXA crypto regsBXA crypto regs

Provide an example to other countries of Provide an example to other countries of how minimal regulation can work; hope for how minimal regulation can work; hope for imitatorsimitators

Acceptable Use PolicyAcceptable Use Policy

No SpamNo Spam No HackingNo Hacking No Child PornographyNo Child Pornography

Background - SealandBackground - Sealand

Originally constructed 1944 as anti-aircraft Originally constructed 1944 as anti-aircraft fortressfortress

Abandoned by UK in 1945, left unoccupied Abandoned by UK in 1945, left unoccupied in international watersin international waters

Occupied by Roy Bates, pirate radio Occupied by Roy Bates, pirate radio broadcaster, in 1966broadcaster, in 1966

Repeatedly challenged and always Repeatedly challenged and always positively resolved for statehoodpositively resolved for statehood

Micronation ProjectsMicronation Projects

Some have been successful – Vatican, Some have been successful – Vatican, East Timor, various ex-colonial East Timor, various ex-colonial territoriesterritories

Many others have been unsuccessfulMany others have been unsuccessful Sealand is in a unique position; can’t Sealand is in a unique position; can’t

be replicated in today’s international be replicated in today’s international legal environment due to treatieslegal environment due to treaties

Sealand’s StatehoodSealand’s Statehood

Initial challenges by UK Customs, virtual Initial challenges by UK Customs, virtual blockadeblockade

Weapons incidentsWeapons incidents Social security tax rulingSocial security tax ruling ““German Incident”German Incident” De facto recognition by continued existence De facto recognition by continued existence

for decadesfor decades

Jurisdictional ArbitrageJurisdictional Arbitrage

Countries can compete based on regulationCountries can compete based on regulation ““Race to the bottom”; good or bad?Race to the bottom”; good or bad? Most countries form cartels to avoid Most countries form cartels to avoid

competition; specifically for taxescompetition; specifically for taxes Precedent with flags of convenience, Precedent with flags of convenience,

offshore companies, banking, reinsuranceoffshore companies, banking, reinsurance Not yet widely applied with net, but initially Not yet widely applied with net, but initially

in mid-1990s in Anguilla and elsewherein mid-1990s in Anguilla and elsewhere

Background – FoundersBackground – Founders

Founders had a common interest in Founders had a common interest in jurisdictionally-advantaged colo, and background jurisdictionally-advantaged colo, and background in IP networking, hosting, crypto, payment, in IP networking, hosting, crypto, payment, international startup companiesinternational startup companies

Initial discussions considered barges offshore Initial discussions considered barges offshore from US; artificial structures in Cortez bank in from US; artificial structures in Cortez bank in CA; small islands in the Pacific; indian CA; small islands in the Pacific; indian reservationsreservations

Discussions took place early 1999-early 2000Discussions took place early 1999-early 2000

Sealand Royal Family & Sealand Royal Family & HavenCoHavenCo

We contacted Michael of Sealand 7/99We contacted Michael of Sealand 7/99 We first visited in 8/99We first visited in 8/99 Contract signed 2/00Contract signed 2/00 HavenCo concept was very similar in spirit to HavenCo concept was very similar in spirit to

early pirate radio early pirate radio Royal Family of Sealand has been very supportiveRoyal Family of Sealand has been very supportive Michael is now actively involved at the executive Michael is now actively involved at the executive

levellevel

FoundingFounding

Havenco funding 2/00-6/00Havenco funding 2/00-6/00 Plans modifiedPlans modified Established:Established:

– redundant connectivityredundant connectivity– 24x7xN security + tech24x7xN security + tech– suppliessupplies– international network infrastructureinternational network infrastructure

Press coverage was excellent but a bit early Press coverage was excellent but a bit early (~ 3 months before actual launch)(~ 3 months before actual launch)

BusinessBusiness

Have a reasonable but not extremely diverse set of Have a reasonable but not extremely diverse set of customers currentlycustomers currently

Hosting prices are $750/mo for minimal Netra, Hosting prices are $750/mo for minimal Netra, 128k of bandwidth. Not more than the con artists 128k of bandwidth. Not more than the con artists “secure vault” charged for “secure colo” during “secure vault” charged for “secure colo” during the peak of the bubblethe peak of the bubble

Continued moderate growthContinued moderate growth Focused on current siteFocused on current site Open to partners for bandwidth, distribution, Open to partners for bandwidth, distribution,

product partnership, legal challengesproduct partnership, legal challenges

Why haven’t you been shut Why haven’t you been shut down?down?

UK doesn’t want direct legal challenge UK doesn’t want direct legal challenge which might enhance Sealand’s sovereigntywhich might enhance Sealand’s sovereignty

No one willing to pay to host really No one willing to pay to host really controversial contentcontroversial content

““We’re just a colo provider”We’re just a colo provider” Free speech ultimately a good PR move in Free speech ultimately a good PR move in

western worldwestern world Really bad customers just use stolen CC’s Really bad customers just use stolen CC’s

in US virtual hosting, or in-housein US virtual hosting, or in-house

Network Equipment RoomNetwork Equipment Room

Current TechnologyCurrent Technology

Commodity gearCommodity gear– Standard 100bt layer 2 infrastructureStandard 100bt layer 2 infrastructure– BGP/OSPF routingBGP/OSPF routing– Crypto tunnelsCrypto tunnels

Servers: PC, SunServers: PC, Sun OS: Prefer Unix, many customers on windowsOS: Prefer Unix, many customers on windows Towards auto-provisioningTowards auto-provisioning Hot-spares online and on-siteHot-spares online and on-site Currently, remote console + power cycleCurrently, remote console + power cycle Full low-bandwidth remote OOB managementFull low-bandwidth remote OOB management

Living on SealandLiving on Sealand

SpartanSpartan Small on-site staffSmall on-site staff Fast net connection, no personal expensesFast net connection, no personal expenses Nice viewsNice views Not much money has been spent on Not much money has been spent on

accomodations; trailer-park level of accomodations; trailer-park level of furnishingfurnishing

Most staff spend 1 week on, 1 week offMost staff spend 1 week on, 1 week off

NOCNOC

22.5’ Rigid Inflatable Boat22.5’ Rigid Inflatable Boat

DifficultiesDifficulties

Remote location means on-site spares keyRemote location means on-site spares key General market conditions; customers ok, General market conditions; customers ok,

we’re ok, vendors go bankruptwe’re ok, vendors go bankrupt Not many people have management Not many people have management

experience with this kind of ventureexperience with this kind of venture Dealing with press is time-intensiveDealing with press is time-intensive

Future PlansFuture Plans

Current plans are to grow current site, Current plans are to grow current site, generating profit with growthgenerating profit with growth

Potential exists in the future for additional Potential exists in the future for additional sites and/or services, but reality suggests sites and/or services, but reality suggests that radical new projects will be separate that radical new projects will be separate ventures or partnershipsventures or partnerships

How the community can helpHow the community can help

Keep fighting legal battles elsewhere for Keep fighting legal battles elsewhere for information freedominformation freedom

Better open-source security software and Better open-source security software and operating systems; improve technical operating systems; improve technical securitysecurity

Anonymity and privacy protection for Anonymity and privacy protection for communications, payments, and system communications, payments, and system managementmanagement

Referrals of customersReferrals of customers

Q &AQ &A