NSI plays hardball on unpaid names

Does a shared registry system allow commercial registrars to act anti-competitively? Competitors of Network Solutions, which also owns the central .com registry, say it is doing just that.

          In a move competitors and customers decry as anticompetitive, Network Solutions, the world's largest registrar of domain names, will keep control over a name for which it has not received payment and auction it off on its site.

          NSI positions the move as an effort to recoup the payments its customers have failed to make on names purchased from the company. But other registrars, and individuals that have purchased domain names, argue that the practice is unethical and violates the contract NSI signed with ICANN, the nonprofit that oversees online name allocations.

          Domain names are purchased from a central registry, which is also owned by NSI – a fact that has fueled controversy in the domain-name business. All registrars, however, have access to the NSI registry. But under NSI's auction plan, thousands of domain names will be held exclusively by NSI.

          Take this example: Under the existing system, an individual who purchases "Picassopaintings.com" from NSI and then fails to pay the bill will eventually see the address deactivated. If someone else wants that same Web address, the buyer can then purchase it from any of the nearly 45 registrars that are actively selling. But NSI's new policy means that beginning next month, it will retain the Web address and auction it on its site, keeping it there, possibly for months, before deleting it.

          Doug Wolford, the general manager of NSI's registry, said he doesn't know how many of the firm's customers would see their domain names auctioned off, placing the number only in the "thousands." Ross Rader, the director of Toronto-based Tucows Names, another registrar, gave a conservative estimate that 5 percent of NSI customers are not paying their bills. That translates to 500,000 individuals.

          "We're not doing this to profit off of domain names," says Wolford, pointing out that NSI does not plan to sell names for more than the customary $35 a year it charges. "What we're doing is getting our debts paid for us.

          "These people have already ignored two bills and the deactivation of their domain name," he says. "These are the hard-core nonpayers."

          No one has disputed that NSI's customers should pay their bills. But competing registrars have questioned why the company didn't simply require that all purchases be made with credit cards – a policy most registrars have adopted to protect against this problem.

          "If their real motivation is to clear up their bad debt, I would submit that there are far more appropriate things to do," Rader says. Wolford countered that NSI is in the process of asking all of its customers to pay with credit cards, but isn't there yet.

          Another competitor of NSI, Register.com, was equally perturbed. "We're very, very troubled with [the auction]," says Elana Broitman, director of policy and public affairs at Register.com. "We're not just going to sit by and watch this happen."

          Broitman suggested that Register's first line of defense would be ICANN. She hopes the group will ask NSI not to auction names, and, if it refuses to back down, discredit the company.

          But ICANN, which has been heavily criticized for its bureaucracy and sluggishness, questions whether NSI has done anything amiss. "I don't have any comment on that without a lot more study," says Mike Roberts, president and CEO of ICANN. Roberts acknowledged that ICANN was aware of NSI's new policy and would examine it, but adds that his organization has made no statement on domain-name auctions. "We're not likely to anytime soon," he says. "It's a complicated issue."

          The agreement a registrar must sign with ICANN orders the registrar to "not unreasonably restrain competition." This is one area where NSI's critics contest that it has crossed the line. But Wolford emphasizes that the number of domain names it would auction is very small, and NSI would retain control of them only for the rest of the year, during which an individual could buy the name. Since NSI gives customers about three months of leeway before they must pay their bills, it would keep a name for a maximum of nine months before deleting it.

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