Despite the DOC's concerns with the initial agreement that the Internet Corporation for Assigned Names and Numbers negotiated with VeriSign, Ted Kassinger, general counsel at the DOC, said that he still has confidence in ICANN's management of the Internet Domain Name System (DNS). ICANN was picked in 1998 by the DOC under the previous administration to take over the task from the US government.
Still, the deal ensures that the department will not be giving up its oversight over ICANN until at least 2007, even though the nonprofit corporation was developed so that the US government could get out of the business of managing the Internet's DNS.
Up until 1999, VeriSign's subsidiary, Network Solutions, had a monopoly over the business of registering the generic top-level domain names (gTLDs) dot-com, dot-net and dot-org.
The agreement the department was originally asked to approve would have allowed VeriSign to maintain control of the dot-com registry, the database of all the names registered in this group, until at least 2007 and most likely beyond, and keep its registrar business, the retail operation of registering domain names for the public. The company would have had to divest control of the dot-org registry, the least popular of the three gTLDs, by 2002 and rebid the dot-net registry by 2006.
This modified a 1999 agreement aimed at helping to introduce competition to the domain name registration market. It would have allowed VeriSign to maintain control over the registry for all three gTLDs until 2007 if it agreed to spin off its registrar business by this May.
As the current operator of the registries for dot-com, dot-net and dot-org, VeriSign gets US$6 for every name registered in these three groups and for each annual renewal.
Some of VeriSign's competitors were concerned that with the changes to the 1999 agreement, VeriSign would have an unfair advantage over its competitors, and could use its control of the dot-com registry to benefit its registrar business.
A DOC official said the agency also had concerns that the changes to the 1999 agreement could hurt competition, and demanded a few additional concessions from VeriSign.
As a result, VeriSign has agreed to rebid dot-net by June 30, 2005. ICANN will also conduct a market test at the end of 2002 to see if the new gTLDs that will begin to be introduced into the DNS this year have at least 10 percent of the global registry market, or if VeriSign's share of new total new dot-com and dot-net registrations has fallen to 25 percent. If neither has occurred, dot-net will be rebid by the end of 2003. A similar market test will take place in 2004.
The changes called for by the department also made it clear that VeriSign does not have antitrust immunity. In addition, ICANN will oversee an annual independent audit of VeriSign to ensure that its operation of the dot-com registry is not benefiting its registrar business.
"We sought changes to promote competition, preserve stability and protect consumers," Kassinger said. "We believe that our objectives have been met."
ICANN President M. Stuart Lynn said he believed the changes "further strengthened the agreements."
Even though the DOC will maintain its oversight role until at least 2007, Kassinger said it "does not represent an enlargement in our participation in the process... on the way to [the DNS] being privatised." He added that "We don't have any less confidence [in ICANN] than we ever had."
Some of VeriSign's competitors remained concerned about the agreement, despite the changes.
Shonna Keogan, a spokeswoman at Register.com, said her company would have liked to see more concrete assurances that VeriSign's registrar business will not benefit from its operation of the dot-com registry.
Larry Erlich, president of Domain Registry, said he is not ruling out a legal challenge to the agreement. He noted that the DOC's approval "did not give VeriSign antitrust immunity with regard to the agreement, which is certainly a ray of hope that could possibly keep them from exploiting the advantage they now have over other registrars."
The contract negotiations have overshadowed what was otherwise a good week for ICANN, which has struggled to gain legitimacy since its inception in late 1998. ICANN announced on Tuesday, May 15, that it had signed contracts with the operators of two of the seven new gTLDs it selected in November--dot-biz and dot-info.
The DOC, which has final authority over whether the new gTLDs get entered into the Internet's root system, praised the completion of the new contracts.
Kassinger issued a statement saying the new gTLDs would provide a "welcome addition to the domain name marketplace. We congratulate ICANN on this latest progress in introducing competition consistent with maintaining Internet stability."
Jonathan Weinberg, a law professor at Wayne State University, said that while so much attention has been focused on the VeriSign negotiations, few have noticed that ICANN's contracts with the operators of the new gTLDs appear to be sailing along, despite continued concerns about the process ICANN used to choose them.
"The bigger picture is that the US government is giving them a totally free hand" in the new gTLDs, Weinberg said.
Officials at Afilias, the operators of the dot-info gTLD, say Afilias will soon begin preregistration for trademark owners, who will have 30 days to register their trademarks as domain names in dot-info before registration is open to the public, which could come as soon as August.
"It really will be first truly global unrestricted global domain," said Afilias CEO Ronald Berg.
Dot-biz is beginning a more complex registration process on May 21 that also gives trademark owners some opportunity to try to keep their trademarks from being registered by others.
