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Stratton Sclavos, CEO, VeriSign

Stratton SclavosThis year, VeriSign extended its reach into the networked world. While the company is involved in a bewildering array of endeavors, from secure e-commerce transactions to domain name registration to selling ringtones (via the recently acquired Jamba), its elevator pitch is that it provides "a layer of intelligence on the network."

VeriSign's intelligent services reside in the layer above the routers and servers that provide the Internet's plumbing and below the applications and services that users deal with. The company has moved into telecom services, switching calls and providing database services, caller ID and local number portability; it soon will begin handling mobile content provisioning.

Sclavos sat down with internetnews.com in VeriSign's Mountain View, Calif., digs to talk .com, telecom and just how many pots the company can dip into.

Q: You've most recently added telecommunications services to your product portfolio. Will we see VeriSign moving into even more sectors?

We began in security, as an enabling service provider, moved into the domain registration industry [with the acquisition of Network Solutions], then into payments and telecom. Our core competency is building massively scalable reliable services and being a trusted entity in the middle.

It's been a 10-year journey to build a common infrastructure and serve multiple markets. We've continued to get more profitable, because we throw volume at the same infrastructure. Our ultimate goal is that all network traffic will touch a VeriSign service, so we can enable it along its way and possibly accelerate the technology.

Q: Do you think the new top-level domains will take off?

There was never really a customer demand for new general-purpose TLDs. A lot of it was rhetoric and fascination with what happened with .com and .net, looking for another gold rush. But if you look at the new ones, like .info or .biz, most owners of those names bought them to protect, rather than to serve. We don't use them. Meanwhile, .com has come back into fashion as a preferred name in many Asian and European countries.

Q: How are you competing to keep the management of .net?

We've been a good operator of .net over the decade. We've certainly demonstrated the ability to scale with demand. I'm not sure anybody else has that capability. There will be political and competitive forces against us, so we'll have to do our best.

Q: Does VeriSign want to own the Internet?

In the global domain name system, about 50 percent of the names are in .com and .net. The rest are in other extensions, [mostly country code domains]. The fallacy of that argument is that .com and .net are a monopoly that all domains run through. In reality, it's about 50 percent of the market.

That's a good market, but at the same time, the faster growers over the past few years were country codes. I don't think, if you look at the market as a whole, VeriSign has that much control -- .com is more popular internationally than it was, but is still not that popular globally. The rest of the market is still large and growing -- and, frankly, not under contracts with ICANN.

Q: Do you think ICANN is doing a good job?

There's a bit of misplaced priorities around some of this on the part of those who advise and give their feedback to ICANN. I think ICANN management has the right goals in mind, stability and security being the main thrusts of what they're concerned about. But they keep getting dragged into the competitive battles.

Q: But if you're operating .com and .net, some people think there isn't enough competition.

If .com and .net are only 50 percent of the market, there's a large percentage of the market that is going elsewhere. I think the need around more competition at extension level is not really there. We need more innovation around the services level. What things could we do if we were able to innovate at the core and make the network more intelligent?

We run a phenomenally scalable and reliable service, and we do it in a more trusted way than I believe anyone else could. But like any other utility, people only notice when something goes wrong. People don't notice that we scaled the network from 1 billion to 14 billion interactions a day, without a hiccup.

We spent all our own money to do that in the last three years at a time when nobody else could invest. At the end of the day, we're a commercial entity; we think we provide a good service and make a decent return on that, and we'd like to be able to innovate around those services.

That's where we get frustrated with the system that exists today in a lack of clarity of where we can innovate effectively. We've got to get into a new debate about what's the future of the network and how do we invest enough to keep these new services coming?

Q: How does telecom fit into VeriSign's plan?

We built out the DNS for intelligence. We then bought into the telecom market at a difficult time for the industry, because we believed the assets we owned around routing and directory services would be very valuable, as telecom came back to life. Now, we operate one of the best service providers for call routing, database services and, now, content services -- much of it running on our common intelligent infrastructure.

Our strategy in telecom is to enable new-generation communications, commerce and content. On the communications side, we own the networks; on the commerce side, we own billing and payment services on the Internet and voice side. On the content services side, we had several carriers coming to us asking for data and content services. So, we bought Jamba out of Berlin. We think it's the worldwide leader in ringtones and graphics over wireless networks. We're seeing a ramp-up in their revenues and their profits. It's been a wonderful surprise on the upside.

Q: You've even added voice over IP services.

The driving reason we went into telecom is that we believed that networks would converge. We thought to ourselves, if we could be the company in the middle between the traditional voice world and the new voice world, we could help our customers make the transition more efficiently. We bought Illuminet to gain the traditional network connection, and we took some technology from our DNS business and began to modify it to be the directories for VoIP routing and calling.

Q: Will Wi-Fi, 3G or VoIP be the real drivers of convergence?

I don't think the consumer cares. The difference in the thinking now is that instead of convergence happening at the core of the network, convergence will happen in the hands of the user. The user wants to know, wherever they are, regardless of the network type or bandwidth, calls for voice and data can get to them and they can self-provision how it happens. It all goes to IP sooner or later; there doesn't have to be a declared winner between traditional wireless, Wi-Fi, Wi-Max or broadband. They'll all win as long as the customer doesn't have to care. I just want the phone to work.

These things were all white-hot in the year 2000 and then went away. They're alive again, but at the very earliest stages. Our view is, build it now so the rest of the ecosystem can evolve around it, so that by '07 or '08, there's an interesting business for us. That's one lesson we learned from the bubble. We should tell people what we've done, rather than what we're going to do and meanwhile, invest for the long term in some of these infrastructures. We don't want to rely on them for next year's revenues.

Q: How is building out the EPC network going?

In essence, it's a copy of the DNS network. We took everything we learned in DNSA about how to look up a name, associate it with an IP address, and then help route the traffic that needs to get there. That's all EPC is.

Q: Right now, a lot of companies seem to be building their own infrastructures. Do you see this?

I feel like we're living this movie all over again. In 1994, it wasn't clear why businesses would use the Internet versus EDI or private lease lines. Once we made it simple to connect anywhere in world, the power of the network showed through.

Right now, people question the value of EPC vs. building all the infrastructure themselves. Once we begin to develop the capabilities, through pilots and software vendors, people will wake up and say, "Wow, that looks like the Internet."

But unlike the Internet, where you couldn't quantify the value, I've seen many retailers and manufacturers point to hundreds of millions of dollars in potential savings.

Q: Will we see even more data convergence, with perhaps EPC data being connected to e-commerce information to enable new kinds of business opportunities?

VeriSign is not smart enough to know what those demands are going to be so we tend to want to build the system in the middle that can serve all those needs. The things we've done that have succeeded incredibly well all fall into that bucket of, build it once, and use it many times.

Our core competency is to run these things and let everyone else plug in.