VeriSign, ICANN Draw Up Domain Deal

Mar 01 2001

WASHINGTON - VeriSign and the Internet Corporation for Assigned Names and Numbers announced Thursday a proposed agreement that would allow VeriSign subsidiary Network Solutions to maintain control of its lucrative .com domain-name registry through 2007 and to continue its domain-name registrar business indefinitely.

In exchange, NSI would give up its control over the .org registry by 2002 and would provide a $5 million endowment for the future handling of the noncommercial addresses. The company also agreed to put its .net domain name registry up for competitive bidding in 2006, but it would retain an equal chance of winning that contract. Under a "presumed renewal" clause, the company would be given a better-than-equal chance in retaining control of the .com registry after 2007.

The proposed deal would supersede a 1999 agreement, in which ICANN had vowed to auction off NSI's registries in 2003 if the company had not already divested itself of either its registrar or registry business.

The deal is subject to approval by ICANN's governing board, VeriSign's board of directors and the U.S. Department of Commerce.

NSI has maintained both its registry and registrar businesses since 1992, when the then-struggling independent company won an exclusive contract with the U.S. government to register .com, .net, and .org domain names.

When NSI's exclusive contract expired in 1998, the newly created ICANN immediately began accrediting new registrars. It designated 76 in the first five months. ICANN began to introduce competition on the registry front last year, when it approved seven new top-level domains. Currently, about 75 percent of registered names end in .com.

"It is both forthcoming competition in the registry business and existing strong competition in the registrar business that has affected the way in which this agreement was put together," said ICANN CEO Mike Roberts.

But some of NSI's competitors say the existing and future competition will not be enough to eliminate the company's overwhelming advantage.

"VeriSign, among all of the new registries, will be the only one that owns both 100 percent of the registry and 100 percent of the registrar," says Elana Broitman, director of policy at Register.com .

Register.com finds little comfort in the 2007 expiration date on VeriSign's rights to the .com registry. "Seven years is an eternity in our business," Broitman says.

Prior to announcing this agreement, VeriSign had indicated that it would most likely to sell the registrar business, and in fact has already solicited bids.

"We were prepared originally to move down the path of divesting the registrar and had accepted bids for that," said VeriSign CEO Stratton Sclavos. "We will go down that path if this agreement doesn't work out."

Roberts says there is no date by which the agreement must be approved, but that he hopes it would be done before May 10. That's the deadline under the 1999 agreement for VeriSign to have sold one of its businesses.