Armed with a list of seven sticking points, a coalition of new domain name registrars lobbied the Internet Corporation for Assigned Names and Numbers (ICANN) and the Commerce Department yesterday to change their operating agreements with Network Solutions (NSI), charging that the original agreements would give the company unfair competitive advantages.
The complaints threatened to hold up swift approval of the agreements, the linchpin in the U.S. government's three-year quest to relinquish oversight of the Net's infrastructure to the private sector and to phase out NSI's exclusive contract to register names ending in ".com," ".net," and ".org."
Faced with the new registrars' demands, the Commerce Department and NSI worked until the start of ICANN's board meeting this morning to hammer out a handful of concessions. ICANN's board then unanimously approved the agreements with one abstention.
The effect of the agreements will be sweeping. The outcome could finally mean lower prices for consumers and businesses when it comes to buying domain names from NSI, which has 6.5 million registrations under its belt. The agreements also ensure the future viability of ICANN and will chart a new direction for NSI's billion-dollar business.
"This is a tremendous boost to ICANN's stability," said Commerce Department spokeswoman Becky Burr. The deal means "lower prices, variety, and more choices, and that is what we've been aiming for."
Some competition gripes addressed
The top complaint had been that unlike new registrars, NSI wasn't being forced to get prepayment from all customers, such as its domain name resellers. Registrars argued that this factor made NSI more attractive, allowing it to garner more sales by floating customers' credit.
NSI already is working to require prepayment from all customers within the next four months. But as an incentive to speed the process, NSI will be allowed to drop its government-fixed registration price of $70 for a two-year registration on all prepaid sales.
The revised agreements also clarified that NSI can't enter into exclusive deals with resellers for the next 18 months, including with Net access providers that refer consumers to the company. Moreover, NSI will have to meet performance levels or face penalties if malfunctions stifle competitors' registrations. The agreement also calls for a searchable database of domain names based on a master list that includes all registrations, not only NSI's sales.
"We think that they were reasonable and business-like requests," said NSI chairman Michael Daniels. "NSI is very pleased with the outcome. I've been amazed at how much progress there has been."
Some registrars applauded the changes and said they were an indication that ICANN is listening to stakeholders in the Net community.
"This was ICANN's rite of passage--it has gone from a top-down organization to a bottom-up one," said Richard Forman, chief executive of Register.com, which has registered 160,000 names, making it the No. 2 registrar next to NSI by a wide margin. "We're happy that the board addressed the concerns, but we have to review the documents."
Other competitors also said that they needed more time to review the details of the agreements.
"I think it's a real sign that we got a wedge in; the chances of any changes seemed out of the question," said Len Bayles, special projects manager for All West Communications, another new registrar. "They've worked on the agreement for a whole year--what's two more weeks for us to look at it?"
Although changes were made today, the core of the deal is the same.
The agreements still make it clear that NSI will abide by ICANN's registrar operating rules and that the company will help fund the body--a contribution that could exceed $2.25 million per year.
Under the deal, NSI also is expected to break its business into two pieces: a retail side that would compete with new registrars and a wholesale "registry" side that resells names to competitors at $6 apiece. However, NSI can only keep a 25 percent stake in the registry, or it faces losing an up to eight-year contract with the government that allows it to keep running the registry.
Some ICANN board members said that the deal doesn't create an entirely equal playing field for competitors, but that it's a good start.
"It's not a perfect world," said ICANN chair Esther Dyson. "Our task here is to take what we were handed and to make it more fair, more open, and more level, but at the same time not to stall progress."