A group of companies that register global Internet domain names are calling on the Internet's domain name management body to reject a controversial agreement with the biggest player in the market.

They want ICANN to agree to changes that they say would mitigate the potential impact on competition.

Several firms, or registrars, that compete with VeriSign in the business of registering Internet domain names in the most popular groups, .com, .net and .org are responding to a controversial agreement negotiated by the company and staff for the Internet Corporation for Assigned Names and Numbers, the group picked by the US government to manage the Internet's Domain Name System.

ICANN's board of directors is set to vote on the controversial agreement on Monday. If the board agrees to it, the US Commerce Department must still bless the new deal.

The deal revises an agreement reached in 1999 among VeriSign's subsidiary Network Solutions, ICANN and the Commerce Department as part of ICANN's efforts to introduce competition into the domain name market.

Up until mid-1999, Network Solutions had a government-sanctioned monopoly over this business of registering names in dot-com, dot-net and dot-org, which are known as generic top-level domain names (gTLDs).

Under the 1999 deal, the company would be allowed to control the database, or registry, of all the domain names that have been registered in dot-com, dot-net and dot-org until at least 2007 if it agreed to sell off its registrar operation, the retail end of offering domain name registration services to Internet users.

The registry is a lucrative business given that VeriSign collects US$6 each year for every name registered in dot-com, dot-net and dot-org.

Under the revised deal, VeriSign can keep its registrar business and continue to operate the dot-com registry until at least 2007 and most likely beyond, if it agrees to divest of the dot-org registry by 2002 and the dot-net registry by 2006. The company will have a chance to rebid to operate dot-net but must compete with others.

In their statement, which was sent to ICANN staff and to the group's Names Council, which is supposed to provide the board with advice on domain name issues, a dozen registrars said "these proposed modifications will make a contract that was already bad for the industry, even worse."

No consensus

The Names Council was set to hold a conference to discuss the agreement and try to reach consensus among its seven constituencies on a recommendation to make to the board, which many say will be difficult given the varying interests.

The group of registrars said the new deal would undermine competition because they claim unlike its competitors VeriSign's registrar business essentially has no wholesale costs when it comes to registering names in .com because the US$6 it pays to the registry goes to the same company.

VeriSign officials have repeatedly said its registrar business has not benefited from the company's operation of the registry.

But the registrars also argue that VeriSign has been able to invest in the dot-com registry over several years without having to face competition, while the operators of the new gTLDs recently approved by ICANN will have to use revenue from their registrar activities to subsidise their start-up costs.

The group suggested some changes that would "provide the minimum safeguards for the Internet community."

They include bidding the dot-net registry in 2003 instead of 2006 and barring VeriSign from participating, removing a volume discount provision in the dot-com registry agreement, and requiring VeriSign to give registrars 120 days' notice before adding new services to the registry.

Melbourne IT signs
Some of the biggest registrars, including Register.com and Melbourne IT, signed the statement. But another major VeriSign competitor, Tucows, declined to sign it and instead issued its own statement on the proposed changes.

In a letter to ICANN Chairman Vinton Cerf, Tucows' director of innovation and research Ross Rader said his company prefers the new agreement to the 1999 deal but has reservations about it. Rader said the company agrees with the suggested changes from the other registrars.

But ICANN staffers have repeatedly said that the new agreement cannot be changed and the board will have to vote for or against it. VeriSign CEO Stratton Sclavos echoed this at ICANN's board meeting earlier this month in Melbourne saying he would not agree to changes.

ICANN staffers say the 1999 agreement was a "bad deal" and would have made it difficult for ICANN to transfer control of all three registries, .com, .net and org, away from VeriSign in 2007. They also note that new agreement forces VeriSign to play by rules more similar to those assigned to the operators of the new gTLDs than the 1999 deal.

When asked whether he thought ICANN would agree to any of the changes suggested by the registrars, Michael Palage, secretariat of the registrars constituency within the Names Council who helped draft the statement, said "were cautiously optimistic that the board will take under advisement our recommendations."

A VeriSign spokesman did not return a call seeking comment.

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