ICANN, NSI reach tentative domain settlement

Claiming to have reached a milestone in the development of the Internet, the US Department of Commerce has announced a series of agreements with domain name registrar Network Solutions over how Internet addresses are registered.

Claiming to have reached a milestone in the development of the Internet, the U.S. Department of Commerce (DOC) has announced a series of agreements with domain name registrar Network Solutions (NSI) that could end a longstanding and bitter dispute over how Internet addresses are registered.

The tentative agreements call for NSI to retain control of the valuable registry of Internet addresses ending in ".com," ".net" and ".org" for at least four years, but are designed to make it easier for other firms to access that registry to offer competing registration services. NSI will also provide access to competitors on more flexible terms, such as allowing Internet addresses to be registered in one-year, rather than only two-year, increments.

Terms also call for NSI to sign a contract with the Internet Corporation for Assigned Names and Numbers (ICANN) making it an accredited registrar, and the terms require NSI to recognise ICANN's authority and participate in its funding by paying annual fees. ICANN is the nonprofit group formed last year to open up NSI's government-appointed monopoly over domain name registrations to competition.

Under the agreements, which is subject to a 30-day public comment period and may be finalized in November, NSI has agreed to pay ICANN as much as $US250,000 per year in return for the right to maintain the domain name registry.

Peter Mott, managing director of Auckland-based domain name specialist 2Day Internet, said yesterday that he welcomed the agreement "and the main reason is that it gives customers choice. It's not a pricing thing and it's not even about service level, it's about having freedom to choose who you do business with. This new agreement is going to allow more registrars to enter the market - and you'll be able to choose who you do business with.

"New Zealand needs to seriously consider adopting something similar. We find it intolerable that Domainz is currently both the registry and the registrar."

The DOC, NSI and ICANN proclaimed the agreements as a crucial step in the Internet's growth. Failure to reach an accord could have resulted in a complex court battle that could have "idled the growth of the Internet," Secretary of Commerce William Daley said at a press conference today.

The agreements may also allow competition in the domain name registration business to flourish, providing consumers and businesses with a broader array of services, lower prices and more choice over who they register their Internet address with.

Wall Street looked kindly on NSI following the announcements. The Herndon, Virginia company's shares on the Nasdaq stock market soared $12.69 to close at $85.50, compared with $72.81 at yesterday's close.

Not all domain name registrars who are trying to compete with NSI were as enthusiastic.

"The good news is that the deadlock has been broken and that NSI will finally be made to sign the same accreditation agreement (with ICANN) that all other registrars have to sign," Richard Forman, president and chief executive officer of domain name registrar register.com, said in a statement.

"Unfortunately, the current situation still promotes an unlevel playing field," Forman said. NSI's continued control of the master registry of .com, .net and .org Internet addresses gives the company an unfair advantage over its competitors, Forman said.

The problems with the domain name system stem largely from the fact that NSI is both a domain name registrar -- that is, it sells Internet addresses to consumers and businesses -- and at the same time controls the domain name registry -- that is, the master database of Internet addresses that its competitors need access to if they are going to also offer registration services.

The situation arose thanks to a government contract awarded to NSI in 1994, which made it the sole provider of Internet addresses for the most popular top-level domains. As Internet use exploded and the domain name business became highly profitable, the government last year determined that the market should be opened to competition, and it formed ICANN to oversee that process.

A battle ensued as ICANN set about prizing NSI's monopoly away from it. NSI was accused of making it tough for other firms to access its domain name registry in order to prolong its monopoly, while ICANN has been lambasted for overstepping its mandate, holding behind-closed-doors meetings and making decisions without consensus.

An important part of the agreements today is that they provide an incentive for NSI to separate its registrar business from its registry function. If within 18 months NSI spins its registry division off into a completely separate organisation, then that organization will be allowed to retain control of the registry for an additional four years, ICANN president Mike Roberts said.

"The agreement requires that there be no affiliation. So a spinoff that leaves the registry in the hands of the same shareholders wouldn't do the trick," Roberts said.

NSI officials say they haven't started to consider such a move.

The tentative agreements reached today are the result of compromises on all sides and should lead to an open market for domain name registration, Esther Dyson, interim chairwoman of ICANN, said at the press conference. "Everybody gave something; no one was truly able to define the terms," Dyson said.

"People who invest in something deserve a return, and we understand that," she added.

Other tentative agreements reached today call for NSI to open its "whois" database -- a tool that provides information about who owns an Internet address -- to other registrars. They also call for NSI to yield control of the interNIC Web site, which it assumed control of earlier this year in spite of much protest, to the Department of Commerce. DOC will turn the site into a public resource with links to all companies offering domain name services.

The tentative agreements unveiled today have been posted for a 30-day public comment period on ICANN's Web site at http://www.icann.org/agreements.htm/ and will come before the ICANN board for final consideration at its meeting scheduled to take place Nov. 2 in Los Angeles.

They also require that as of Jan. 15, 1999, NSI as a registry will reduce the fee it charges competing firms to $6 per registration per year, down from $9 today. NSI will be contractually obligated to provide equal access to the registry of .com, .net and .org addresses to all accredited registrars.

ICANN, in Marina del Rey, California, is on the Web at http://www.icann.org/. NSI, in Herndon, Virginia, is at http://www.nsi.com/. The Department of Commerce is at http://www.doc.gov/.

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