VeriSign concedes .net loss for .com control

The proposal, reached with the Internet Corporation for Assigned Names and Numbers (ICANN), allows VeriSign, the Web's biggest registrar of domain names, to continue ownership of its business that sells Web addresses to consumers and businesses.

But by agreeing to the deal, VeriSign buys more time for its registry business. An earlier agreement required the company to spin off the registry portion of its business by May 2001.

VeriSign runs two services focused on domain name registrations. The registrar portion sells domain names to the public, competing with rivals such as Register.com. The registry unit charges registrars to add domain names to a central database, which it alone controls.

The original deal was designed to encourage the separation of the registry and registrar business. ICANN said that was no longer immediately necessary because competition in the registrar business is strong, calling it "more successful, and more rapidly successful, than anyone anticipated."

In announcing the new proposal, ICANN said the move would "largely eliminate the vestiges of special or unique treatment of VeriSign based on its legacy activities before the formation of ICANN."

VeriSign's Network Solutions (NSI) division was once the undisputed overseer of domain names, holding a government-granted monopoly over registering and maintaining all names ending in .com, .net and .org. The federal government ended that monopoly by allowing other companies into the business and began the controversial process of establishing new domain suffixes. VeriSign--which bought NSI a year ago--still has a leading position in the field, but its dominance is dwindling.

To extend its business in the open market, the company recently unveiled a new service, dubbed WebNum, that will turn telephone numbers into Web addresses, with the promise of making it easier for wireless phone owners to enter addresses while surfing the Net.

Under the terms of Thursday's proposal, VeriSign will operate the .org registry only through December 2002, but it must ensure the suffix regains its status as an identifier for nonprofit organizations. Its control of the .net registry will last until Jan 1, 2006, and the rights to the .com registry will expire in November 2007.

However, the proposed agreement leaves the door open for VeriSign to maintain its ".com" and ".net" registries after that, company executives said.

"After 2006, we will be able to recompete on a level playing field with everybody else for the .net registry," said Bob Korzeniewski, executive vice president of corporate development.

The proposed agreement still must be approved by the ICANN board of directors, the Commerce Department and VeriSign's board of directors. Should the deal be rejected, VeriSign will continue to operate under the existing registry agreements and will be forced to separate its registry business from its registrar business by May.

The proposed deal is posted on the ICANN Web site for public comment.