RealTime IT News

Registrars Threaten Suit Against ICANN

Several domain registrars are threatening to sue The Internet Corp. for Assigned Names and Numbers if the group does as expected Thursday and approves a controversial agreement involving the Commerce Department and Network Solutions Inc.

During ICANN's board meeting in Los Angeles this week, several NSI competitors have alleged the deal is anticompetitive. The agreement between ICANN and Network Solutions (NSOL) was part of initial efforts to introduce competition into the domain business. Among other things, it gives NSI control over the master database or registry of Internet addresses and determines how much money NSI will continue to receive for maintaining the system.

The competitive registrars have drawn up a list of seven points of concern about the DOC/ICANN/NSI agreement. They range from unhappiness with the lack of standards for measuring the performance of NSI's registry function, to the handling of the internic.net web site.

Domain registrar Advanced Internet Technologies is leading the lawsuit charge. Matthew Cockman, the company's general counsel, said a lawsuit will be the company's only solution if no other agreement can be reached. Cockman predicts other registars will join the lawsuit.

Cockman's company had a Washington, D.C., law firm analyze the ICANN-NSI deal and that firm determined the agreement likely violates federal competition laws.

Bill Whyman, Internet analyst at Legg Mason Precursor Group, said registrars are still unhappy about the length of NSI's deal and the fact it receives $6 for each domain registered.

"It's really the Department of Commerce more so than ICANN that had to be representing the interests of competing registrars. The basic problem is the competitive registrars and Commerce have different time horizons. For DOC saying (NSI gets) this deal for four years and maybe eight, that's a short time for them. But for a competing registrar, four years is an eternity."

Paul Merenbloom, an equities analyst at Prudential Securities, said no matter how the board votes, uncertainty will rule going forward.

"I'd say at this moment all bets are off. This is the quintessential jump ball and I don't think anyone really knows what will happen. If a deal's not signed, that opens up the unknown -- what's the next step? If one is signed, the next thing we could hear is 'See you in court, counselor,'" he said.

The parties met Wednesday night to negotiate a compromise, but none was reached. It's possible that ICANN's board could decide to put off a vote on the agreement until it can satisfy the registrars. Wednesday, however, ICANN chairperson Esther Dyson and counsel Joe Sims indicated that they believe the deal, while not perfect, is the best compromise possible.