The Department of Commerce has resolved the outstanding legal issues needed to migrate management of the internet domain name system from a government contractor to a nonprofit organisation -- a move that is being heralded as a landmark in the evolution of the internet.
The Commerce Department, Network Solutions Inc (NSI) and the Internet Corporation for Assigned Names and Numbers (ICANN) announced on Tuesday that they have reached a series of agreements designed to privatise the registration of .com, .net and .org domain names. The agreements are expected to be signed in November, after ICANN's membership approves them.
The agreements come after months of intense negotiations that were watched closely by the internet user community, Congress and foreign governments. Commerce Department officials say they are pleased that all the parties involved have avoided ending up in court.
"These agreements remove any concerns that e-businesses may have about the stability of the internet,'' says Becky Burr, associate administrator for the Commerce Department's National Telecommunications and Information Administration. "When competition for domain name registration kicks in, it's going to mean lower prices and more choices'' for companies doing business online.
For the past six years, NSI of Herndon, Virginia, has had an exclusive agreement with the Commerce Department to register .com, .net and .org domain names and to collect fees for the use of those names. NSI also maintains a central database of assigned names called Whois as the sole registrar of domain names.
The Clinton Administration targeted NSI's monopoly position in 1997, when it announced plans to create a competitive market for domain name registration services. In June of 1998, the Commerce Department issued a white paper that outlined its intent to hand off this responsibility to a nonprofit consensus building organisation. It chose ICANN as that organisation last November.
The agreements give a boost to ICANN, which has been struggling to create an organisational process and a steady method of funding since its inception about a year ago. Under the terms of the agreements, NSI will formally recognise ICANN's authority to oversee the domain name registration process and will pay ICANN $US1.25 million up front in annual fees. The agreements also spell out procedures for how ICANN will achieve consensus before taking action regarding either the domain name registration or registry business.
"It's a huge relief as well as a pleasure that we've come to terms,'' says ICANN interim chairman Esther Dyson. NSI will be a "very welcome registrar''.
Under the agreements, NSI wins a three-year extension to its exclusive contract to run the Whois database, which the company will now operate until 2004. NSI also was given a financial incentive to spin off its registration business within the next 18 months. If it does so, NSI's contract to maintain Whois will be extended for another four years until 2008. After that time ICANN will select a new registry, and NSI can compete for that deal.
NSI also apparently retains ownership of the Whois data, but is required to provide access to the public and to companies that want to repackage and resell the data (except for use in spam). Another win for NSI is that the company can set its own prices for registration services, now regulated at $35 per name, per year.
Additionally, NSI will continue to maintain the internet's authoritative root server, although management responsibility for this server may be transferred to ICANN at some time in the future.
"NSI is committed to moving forward with the Department of Commerce and ICANN,'' says Michael Daniels, chairman of NSI. He says the agreements will allow millions of users to get on the internet quickly and cheaply and will be good for the growth of e-commerce.
For companies entering the domain name registration business, the agreements provide a level playing field in terms of how they will interact with NSI's registry business. NSI will drop its fees for registrars from $9 per name, per year to $6 as of January 15, 2000. NSI also will allow registrars to accept one-year registrations instead of only two-year registrations, and NSI will make it easier for companies to transfer from one registrar to another.
Meanwhile, the Commerce Department again extended its test bed of a shared registration system until November 5, when the agreements are expected to be signed. Currently there are 11 companies registering domain names in .com and another 60 companies getting ready to compete in this market.
Network managers' reactions to the agreements were mixed.
"I worry about the concentration of power'' with NSI, says Brandon Fouts, network administrator at the Washington State Hospital Administration. What Fouts would like to see next is more domain extensions, including geographic qualifiers for states and countries. "We need to increase the number of domain extensions,'' he says.
"The government should stay involved in the situation,'' says Rich Giltner, a network analyst with Fingerhut in Minnetonka, Minnesota. "Naming should be a tightly regulated utility."