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NSI reaches Net name agreement with groups

Stock in Network Solutions jumps 17 percent on news of a three-way deal with the Commerce Department and the Internet Corporation for Assigned Names and Numbers.

Stock in Network Solutions, the dominant domain name registrar, shot up more than 17 percent on news of a three-way deal today with the Commerce Department and the Internet Corporation for Assigned Names and Numbers (ICANN).

Participants in the negotiations put forward a united front, each saying they had given up something over the lengthy talks, which at many points had appeared too fractured for compromise.

"Nobody is claiming victory," said Michael Roberts, interim CEO of ICANN, a government body appointed to oversee administration of the domain name system.

Exactly what each side had given up was not easy to identify in the agreement, however.

"I wouldn't want to point to anything in particular," said Christopher Clough, NSI's vice president of communications, when asked on what points the company had compromised. "On the whole, that's too difficult, because of the complexity of the agreements."

The five-part deal, which must still be approved by ICANN after a 30-day comment period, resolves a number of key issues concerning the relationship between NSI, ICANN, and the Commerce Department.

Significantly, NSI agreed for the first time to recognize the authority of ICANN to regulate aspects of the domain name system and agreed to grant public rights to certain features of its domain name database. This was a major change in strategy for the company, which had previously balked at following ICANN procedures and had said that the nonprofit had no authority over its business.

Joe Simms, a partner with Jones Day Reavis & Pogue--a Washington law firm that is representing ICANN--said the registry ownership impasse was resolved because of the organization's refusal to deal with technical intellectual property issues.

"We tried to deal with the practical matters, rather than getting involved in a theological debate" over ownership, he said.

With certain limitations, the deal guarantees public access to NSI's database through so-called Whois queries that identify the owner of a domain name, as well as bulk access for a fee.

For its part, NSI also won some important concessions. Under one part of the deal, known as the Registry Agreement, the company will be paid $6 (down from a $9 fee) for each domain name registered in the ".com," ".org," and ".net" top-level domains, which it currently runs. The agreement is renewable after four years, or up to eight years if the company splits apart its registry duties from its domain name registration business.

"NSI got a pretty good deal," said Michael Froomkin, a law professor at the University of Miami, who also runs the ICANN Watch site. The agreements "are renewable, and every time someone registers [a domain name] they get paid…and they get to keep substantial control of the database."

But Froomkin downplayed the run-up in NSI's stock, noting that investors may have discounted the company for the possibility of a "war with ICANN."

At least one NSI competitor was quick to fault the deal for failing to open the ".com" registry contract to competitive bidding. NSI won't face that challenge for at least another four years.

"The good news is that the deadlock has been broken and that NSI will finally be made to sign the same accreditation agreement that all other registrars have to sign," said Richard Forman, CEO of Register.com, one of the companies selected earlier this year by ICANN to compete with NSI in the domain registration business. "Unfortunately, the current situation still promotes an unleveled playing field."

But Christopher Ambler, who says he has been fighting to get a ".web" registry off the ground since 1996, called the deal acceptable.

"This agreement, while not perfect, looks agreeable," said Ambler, who founded Web registry company Image Online Design in 1996. He expects the agreement to be a model for prospective top-level domain registries, such as his own.

"[We] expect to see [our] Web registry approved without delay," he said.

While ICANN is actively considering creating new top-level domains to augment the current roster of five, today's agreements do not directly address the issue.

"This is something the private sector will have to address," said Andy Pincus, one of the government's lead negotiators on the deal. "This has always been an issue ICANN has had on its plate. Now that the basics have been put in place, ICANN can move on to these types of issues."

Pincus praised the deal for "putting ICANN on a clearer footing."

As for the stock market's reaction to the deal, he begged off a response.

"My responsibility has been to make sure the deal comports with the public interest," he said. "I'll leave it to others to worry about the financial consequences in the private sector."