By Nick Patience
As expected, Network Solutions Inc has agreed to formally recognize the Internet Corporation for Assigned Names and Numbers in return for a highly lucrative four-year extension to its contract to run the exclusive registry for domain names ending in .com, .net and .org that will take it through to 2003. In a complicated set of tentative agreements announced from all sides yesterday, NSI is being encouraged to sell the registry business within 18 months of signing the agreements. If it does so, the new registry owner will get another four-year extension, taking it through to 2007, which will give NSI an even more valuable return on its investment of the past seven years. ICANN interim chairman Esther Dyson said that the separation of the registry and registrar would provide for market regulation, rather than regulatory oversight.
NSI chief executive Jim Rutt said that while NSI may not be completely happy with every detail of the multi-headed agreement, he was happy with the bundle. He said it established that ICANN’s role is to identify and ratify the consensus of the community, not to act as a legislator for the internet. Predictably enough, the market liked what it saw for NSI’s immediate future and the stock closed up $12.6875, or 17.4% at $84.50 on very heavy trading.
The built-in incentive means that NSI will probably look to offload the registry businesses before May 2001, giving the buyer a guaranteed exclusive registry business for com/net/org domain name until at least 2007. Under the terms of the agreement, it has to sell it off completely, rather than spin it off to existing shareholders. However, chairman Mike Daniels says he hasn’t even started thinking about how or when that might happen. Sometime during the next year or so ICANN is expected to introduce new top-level domain registries and NSI is expected to apply to become one of those as well.
NSI is expected to sign the various agreements with ICANN and the Department of Commerce on November 5. From then until January 14 NSI’s registry business will still be able to levy a $9 annual charge for each domain name registered, but after that NSI will receive $6 per year for each domain name. As a registry, NSI has agreed to pay an annual fee to ICANN of up to $250,000 and the first payment will be made on November 5. NSI has also agreed to modify the shared registration system software by January 15 so that one-year registration will be permitted and renewals in one- year agreements, rather than the two-year current standard.
NSI will pay ICANN $1m of its annual fee for being a registrar, which is also part of this deal. NSI has agreed to pay up to $2m a year and to pay any amount up to that so long as those registrars paying two-thirds of the whole sum approve the amount. NSI will sign a revised registrar agreement with ICANN, which will also apply to all com/net/org registrars to be a registrar through November 2003. It has the right to renew that agreement indefinitely, as do all the registrars, provided they meet ICANN’s minimum set of accreditation guidelines.
The hyper-extended testbed phase of early competition in domain name registration will finally be over on November 5, having been extended five times since the original end-date of June 25. The reason for this last extension is so that ICANN can solicit comments about these agreements prior to its annual meeting in Los Angeles on November 2-4. ICANN CEO Mike Roberts says he does not anticipate that the board will approve all of these measures, but comments posted during the 30-day period leading up to the board meeting will be taken into account before any final decisions are made.
All the registrars will have to provide free access to their whois data and are barred from providing any legal restriction on its use with the exception of preventing its use for the purposes of spamming, which is not illegal, but nonetheless not permitted under these agreements. Third-party bulk access must also be provided, fo
r which the registrar will be entitled to charge up to $10,000 a year.
ICANN’s Dyson said that everybody gave something and nobody was able to exert their power during the negotiations, which have been going on more or less solidly for the past three months. Commerce secretary William Daley said that as with any negotiations, compromises had to be made. He added that the agreements put ICANN on a stronger footing while making NSI a full partner in the process of private sector management…most importantly, we worked this out at the negotiating table – not in a court room, he said.
