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VeriSign Runs Into Increasing Resistance

VeriSign is finding it more and more difficult to get approval of its agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) in Washington, D.C.

After successful talks with Department of Commerce officials Monday night, it looked like the seal of approval for VeriSign's continued dominance in the registry and registrar industries was a slam dunk. Even its critics of the deal conceded defeat to the domain name giant, saying they were outgunned.

But inquiries from the Hill and at the Department of Justice have put a hitch in VeriSign's designs.

While officials from the DoC and VeriSign took the day off Wednesday from negotiations, critics and Congressmen were putting together a defense against what many are saying is a government-approved monopoly over the Internet's domain names.

Reps. John Dingell (D-MI) and Edward Markey (D-MA) sent a letter to Donald Evans, DoC Secretary, Tuesday night asking for clarification on the Department's definition of competition, in regards to the proposed deal between VeriSign and ICANN.

"The agreement incorporates a most unusual technique for encouraging competition," the letter states. "Giving an existing monopoly a substantial advantage over new entries which have no name identification or the extensive financial resources of a large corporation is most unlikely to further robust competition."

The two Congressmen also requested a staff meeting between the Commerce Department and the Subcommittee on Telecommunications and the Internet by Friday.

Brian O'Shaughnessy, VeriSign spokesperson, said he is concerned about the misconceptions held by many critics of the deal.

"It's our belief that their focus is misplaced and that we are certainly disappointed to learn of their concern," O'Shaughnessy said. "Truly we believe, as does ICANN and the DoC, that the revised registry agreements are better overall for the future of the Internet. We seek to get approval of those revised registry agreements in short order."

At issue is VeriSign's control over the Internet's biggest domains -- .com, .net and .org. The U.S. government paid for much of the infrastructure that has made the company so profitable today, profits VeriSign used to buy up Network Solutions, Inc., last year, the world's largest domain name registrar.

The combination of world's largest registry/registrar has many critics up in arms over its relationship with ICANN and the DoC. When it was established by the DoC, ICANN was entrusted to bring stability to the World Wide Web, and its close relationship with VeriSign made that successful.

But it's a relationship that has crossed the line, many people are now saying.

A letter by Joe Sims to an official at VeriSign earlier this year seemed to prove what the critics were saying. Dated Jan. 12, 2001, Sims said, "I do not see anything there that would have any potential at all for generating the political support necessary to change the status quo, and I would not be interested in investing any of my political capital in even raising the possibility."

If there was nothing suspect about the deal between VeriSign and ICANN, Larry Erlich, president of DomainRegistry.com, said, why was a power broker like Sims unwilling to speak out in its behalf?

"When I met with the people at the DoC last week, I could see the pressure that they were under to approve this deal, and now I know why," Erlich said. "The deal languished between June, 2000, and things heated up in January (2001) after Sims made his 'investment.' "

In addition to Congressional and public outcry, the Department of Justice made its own inquiry into the VeriSign/ICANN agreement to see if it violates any antritrust policies.

According to Mary Crawford, DoC spokesperson, the Department has always had a policy of taking input from all sources when making a ruling of this nature.

"Throughout the process, we have taken into account the views of anybody who's offered them and that includes the Justice Department," Crawford said. "Our bottom line is we have any eye toward competition and stability, those are the two driving forces behind the process from our viewpoint and we are confident that we can reach an agreement that makes sure those two things are taken care of.

DoC and VeriSign official are resuming talks this afternoon about likely concessions.

Rumors abound, ranging from complete capitulation by the DoC to VeriSign's early withdrawal from the .net registry, which is slated for 2007, according to terms of the deal.