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Net name registrars vie for fairer competitive landscape

Jockeying for a bigger slice of Network Solutions' ".com" sales, new Internet name registrars try to derail approval of the company's crucial agreements with a Net governing body.

LOS ANGELES--Jockeying for a bigger slice of Network Solutions' ".com" sales, new Internet name registrars today are trying to derail the approval of the company's crucial agreements with the U.S. government and the body setting policies for the Net's address system.

The registrars aired a firestorm of complaints today to try to alter or quash the agreements during the first annual meeting of the Internet Corporation for Assigned Names and Numbers (ICANN), which was recognized by the White House last November to administer the Net's core technical functions and to foster competition with Network Solutions (NSI).

At the heart of the protest is registrars' complaint that they can't truly go head-to-head with NSI, which has a grip on almost 6.5 million domain name registrations and the first shot at renewing most names, which cost $70 for two years.

"There are many accredited registrars, but they will never be able to compete," said Matthew Cockman, general counsel for Advanced Internet Technologies, which is among the more than 85 ICANN-approved firms kick-starting a registrar.

For almost three years, the Clinton administration has been trying to transfer control of the Net's infrastructure away from the U.S. government and its contractor, NSI. The negotiations have been closely watched because domain names are the primary gateways to information, services, and products on the Net.

Brokered by the Commerce Department, the agreement before the ICANN board tomorrow makes clear that NSI, which had an exclusive government contract to register Net names, will abide by ICANN's rules.

Under the deal, NSI also has agreed to help fund the body--a contribution that could exceed $2.25 million per year--and to break its business into two pieces: a retail side that would compete with new registrars and a wholesale side known as NSI's registry.

For a long time, NSI had insisted that it owned the registry. Now it can only keep a 25 percent stake in the registry or face losing an up to eight-year contract with the government that allows it to keep running the registry and sell names at a wholesale price of $6 apiece to competitors.

A billion-dollar, publicly traded company, NSI says it made great compromises. But that doesn't satisfy many of NSI's hopeful competitors.

Long list of gripes
Echoing complaints filed with ICANN during the past month, at least 17 registrars that make up ICANN's domain name constituency said today that they oppose the agreement. Although there was a 30-day comment period, registrars such as America Online, NameSecure.com, and Register.com banded together today, laying out seven points of contention.

If ICANN doesn't listen, some registrars have threatened to take legal action.

"Money from registrars is going to make up 50 percent of ICANN's budget, but we were not consulted on this agreement," said Ralph Datoc, vice president of operations at EnetRegistry.com. "They can expect a lawsuit to be filed."

The registrars' list of demands ranges from technical issues to drastic steps that need to be taken to break up NSI's monopoly on the domain registration market.

NSI has more than 200 distribution channels, such as ISPs, Web site hosts, and its own site, to tap domain name registrations.

"ICANN needs to stop NSI from locking channel partners into exclusive agreements," said Len Bayles, special projects manager for All West Communications, a new registrar. "Those points of entry are where all the money is, because consumers rely on their ISP to point them in the right direction to a registrar."

The registrars also want more say over increases in ICANN accreditation fees, which are now $5,000 for one year. Based on the NSI agreement, however, the fees can only be altered by registrars that account for two-thirds off all Net name sales. So for now that power goes solely to NSI.

The registrars want other fixes as well, including the ability to point all Net users to a single database that documents who owns a given domain name. NSI and the new registrars are building separate listings. However, the agreement with NSI dictates that one central Web directory will be created.

Will competitors be heard?
Despite the registrars' objections, however, a dramatic rewrite of the agreement is not expected.

"The issues that have been raised don't fall under the agreement," said Joe Sims, a lawyer with Jones Day, ICANN's law firm. "I don't expect core changes."

NSI officials said they expect the agreement to be approved almost as is.

Approval of the agreement would mean the end of a long-standing impasse between NSI and ICANN.

If the agreement is not adopted, ICANN will not only lose its first commitment of steady funding, but it could open the door for litigation; NSI will no doubt take steps to protect its shareholders and past investments to build its domain name registration system.

NSI, the government, and ICANN have been burning the midnight oil to hammer out some concessions for competitors. For example, NSI is expected to agree to an amendment that its registry will meet certain performance standards or face penalties if malfunctions stifle competitors' registrations.

Still, pressure is on the Clinton administration to make this work.

"These agreements don't reflect any change in the position set out by the U.S. government to transition management of the domain name [system] to the private sector," Commerce Department spokeswoman Becky Burr said this afternoon during the public meeting. "These agreements move us closer to our goal; that is because they enable ICANN to get on with its job."

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