DOJ expands NSI antitrust probe

NSI last week received a Justice Department letter confirming the agency's intention to look into NSI's control of the database, which the company jointly developed with the federal government, the company said.

The database is the Internet equivalent of the "holy grail." In addition to mapping out addresses, it contains the business contacts behind more than 3.5 million domain names. Herndon, Virginia-based NSI has been compiling the database since 1993, when it won the exclusive right to register domains ending in ".com," ".net," and ".org" under a cooperative agreement with the National Science Foundation. Those endings account for an estimated 75 percent of the world's Net addresses and were responsible for the bulk of NSI's $93 million in revenues last year.

NSI also is responsible for providing crucial day-to-day maintenance of the Net's domain name system.

"NSI acknowledges the receipt of a letter from the Department of Justice, and we've always fully cooperated with the Justice Department and will provide them with any information that is requested," NSI spokesman Chris Clough told CNET News.com.

A Justice Department spokeswoman declined to discuss the possibility of an investigation of NSI but added that antitrust investigators "are looking at the possibility of anticompetitive practices in the Internet address registration industry."

The Justice Department's expansion comes as NSI has responded to the impending end of its government-appointed monopoly. With the recent entry of five "test-bed" registrars into the ".com" registration space, and others soon to follow, NSI has maintained that it owns the database contents, pointing to language in the cooperative agreement that says "intellectual property" developed under the deal is NSI's property. The claim has sparked controversy among those who claim that the database is a public resource.

NSI's maintenance of the database has been a thorny issue recently.

In January the company, without prior notice, removed data showing when a domain name was originally registered. The information was restored in April, as NSI responded to complaints and negotiations with the Commerce Department, which now oversees the U.S. government's role in Internet systems. NSI had said it was trying to root out domain name speculation or "cybersquatting," the practice of reserving potentially lucrative names in hopes of selling the rights.

The company also was criticized after it redirected traffic from the InterNIC site to its own. InterNIC, cooperatively maintained by the government and NSI, has been used by experienced domain name consultants to buy addresses in bulk, as it provides "bare bones" registry services to Internet service providers and other firms with advanced technical skills. Critics claimed the move violated the cooperative agreement, which requires NSI to seek written permission before implementing major changes in service.

The Justice Department first launched its investigation of NSI in June 1997, shortly after PG Media filed a private antitrust lawsuit against the registrar. Investigators sought information "to determine whether there is, has been, or may be a violation of antitrust laws...relating to Internet registration products and services," NSI wrote in a filing with the Securities and Exchange Commission.

PG Media's suit was recently dismissed by a federal judge in New York, who ruled that NSI was immune from antitrust suits because it was acting under authority of the federal government. PG Media has appealed the ruling.

Late last month, the nonprofit Internet Corporation for Assigned Names and Numbers, which was appointed to open up the registration of ".com" addresses, selected five domain registration competitors: America Online, CORE (Internet Council of Registrars), France Telecom/Oleane, Melbourne IT, and Register.com.

But some nine days after the Commerce Department launched the trial phase of its plan to open up domain name registration, NSI remains the sole registrar of addresses carrying the ".com" ending. At least two of the new registrars still have not obtained the software necessary to access the master registry maintained by NSI, people familiar with the situation said, and none of the companies have said when they will start selling domain names under the shared registration system.