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Internet

VeriSign playing by the rules

The domain name company appears to be complying with rules that require it to share its database with other companies that sell Web addresses, according to an auditor's report.

Domain name company VeriSign needs to keep better records of some transactions, but appears to be complying with rules that require it to share its database with other companies that sell Web addresses, according to an auditor's report.

The report, released in June by auditor Ernst & Young, provides a glimmer of good news for the company, which has hit some recent stumbling blocks--including a decline in domain registrations, financial losses and an FTC investigation of its marketing practices.

The auditors found that VeriSign generally has provided competitors with equal access to the domain names, despite concerns it wouldn't. However, the auditors found the company isn't maintaining adequate daily records of its database system.

The company is subject to yearly audits in the wake of a restructuring last year that allowed it to keep both its registry and registrar units. The registry unit charges registrars to add domain names to a central database, acting as sort of a wholesaler, while the registrar sells domain names directly to the public.

Competitors had worried the setup could lead to a conflict of interest if VeriSign restricted access to the names, but the auditor's report didn't find one.

VeriSign spokesman Brian O'Shaughnessy said the company is working with the auditors to come up with a solution to the concerns about record keeping, which he said involved missing labels on some boxes.

"We were found in compliance with the vast majority of issues the auditors were looking for," he said.

Nevertheless, the federal officials who oversee the process also expressed concerns about the procedures of the domain name giant. The Department of Commerce is keeping close tabs on the Internet landscape as more domains go online and as VeriSign evolves from a government-granted domain name monopolist to a company that operates in a competitive market.

The DOC is also scrutinizing the Internet's governing body, the Internet Corporation for Assigned Names and Numbers (ICANN), which is responsible for overseeing the transition and addition of new domains and is going through a massive and controversial reform itself.

"The next few months will be a critical time not only for the Department and ICANN, but also for the global Internet community," Nancy Victory, the department's assistant secretary for communications and information, wrote in a letter to ICANN in July.