VeriSign’s Fate to Be Determined on Monday

The U.S. Department of Commerce (DoC) is set to make a decision Monday that
is likely to completely alter the shape of the domain name industry: it will
rule on the legitimacy of a deal struck between the domain name system (DNS)
governing body, the Internet Corp. for Assigned Names and Numbers (ICANN),
and Mountain View-based VeriSign Inc., parent of Network Solutions Inc. (NSI), the world’s
largest registrar and maintainer of the .com, .net and .org domains.

The final contract between VeriSign and ICANN was passed to the DoC for consideration on April 17. The contract is a
renegotiation of the deal VeriSign struck with the DoC in October 1999,
which stipulated that VeriSign must divest ownership of either its registrar
or registry businesses.

The renegotiated deal allows VeriSign to remain a combined registrar and
registry business, as well as maintaining control of the lucrative .com
domain until 2007. Under the terms of the deal, the company’s contract for
control of the .org registry expires in 2003, and the company will give $5
million to an as-yet-unnamed non-profit organization that takes over
management of the domain. VeriSign will also keep its hands on the .net
domain until 2006, when it go up for competitive bids. VeriSign will have
the right to bid on the domain.

Additionally, the company will fund up to $200 million for the research and
development of a universal WHOIS database to list the name and owner of
every domain name registered in an ICANN-approved global Top-Level Domain
(gTLD).

Because the deal, alters an existing contract between the DoC and VeriSign,
the DoC has the power to accept or reject it. And the department is under
pressure to take that decision-making process very seriously. On March 1, a
bipartisan group composed of members of the House Committee on Energy and
Commerce and the Subcommittee on Telecommunications and the Internet wrote a letter to the DoC asking it to explain its role in the renegotiation
of the contract. Signers included Rep. W.J. Bill Tauzin, chairman of the
Committee on Energy and Commerce, Rep. John D. Dingell of the Committee on
Energy and Commerce, Rep. Fred Upton, chairman of the Subcommittee on
Telecommunications and the Internet, and Rep. Edward J. Markey of the
Subcommittee on Telecommunications and the Internet.

“Without taking a position on the propriety of the revised agreement, we
want to ensure that any actions by ICANN support and encourage strong,
vibrant competition,” the representatives wrote. “Accordingly, we
respectfully request that the department fully analyze the competitive
issues that arise as a result of this agreement.”

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