DoC Clears Landmark Verisign-ICANN Deal

The U.S. Department of Commerce Friday approved the landmark agreement between the Internet Corporation for Assigned Names and Numbers (ICANN) and VeriSign Inc., the world’s largest registrar of top-level domain (TLD) names, with few changes.

However, the DoC did increase its oversight over ICANN and protect
itself from antitrust litigation.

VeriSign continues its domination in the registry and registrar businesses,
with the expiration date of the .net domain moved up six months, to June
30, 2005. It’s a date that could potentially be moved up two years, if the
DoC finds competition standards have not been met.

To quantify that, government officials will take a “snapshot” on Dec. 31,
2002 of the registry market share from the four new global top level
domains (gTLDs) and compare it to the .com and .net domains. If market
share is less than 10 percent, VeriSign’s .net ownership will expire Nov.
10, 2003. The four domains to be evaluated are .biz, .info, .name and .pro.

Another snapshot will be taken on Mar. 31, 2004, and if the new gTLDs
haven’t reached 13 percent market share, VeriSign will be required to give
up .net on Jan. 1, 2005.

The Department also required VeriSign to subject itself to independent
audit to ensure its registry and registrar businesses remain
separate. Officials hope that will be enough to keep the two from sharing
information that gives it an unfair advantage over other registrars. The
reports will be submitted yearly to the DoC, ICANN and the Department of
Justice. A summary will be released to the public afterwards.

According to Ted Kassinger, DoC general counsel, this doesn’t mean the
department is increasing its oversight role over ICANN, just the opposite.

“The Commerce Department’s role here was based on our contractual
obligation to approve the agreement,” Kassinger said. “It does not
represent an enlargement of our participation in the process that is
substantially on its way to being privatized. We are just going to put the
process in place and step back.”

But VeriSign clearly won the day, with its continued hold on the registry
of .net to conceivably 2005 and .com through 2007. Nearly one-third of all
names are through the .com domain, of which VeriSign gets $6 per name for
holding the registry. It’s plans for .org remain unchanged; it will be
released in 2002.

Kassinger said, given the policies it was given for overview — stability
and competition on the Internet — the agreement fit all the conditions.

“Our goal throughout the negotiating process was to make sure consumers
reap the benefits of an open, stable and competitive Internet,” said
Kassinger. “These agreements achieve that goal. We sought changes to
promote competition, preserve stability and protect consumers. We believe
that our objectives have been met.”

The DoC also absolved itself of any antitrust litigation that might arise
from the agreement between ICANN and VeriSign, an obvious move considering
the department has been under intense scrutiny from consumer advocates, the
Department of Justice and Congress.

Larry Erlich, president of, said the antitrust “get out
of jail free” card was obviously one of the sticking points for the
week-long meetings between VeriSign and the DoC.

“I am not ruling out some legal challenge, and it is interesting to note
that the DoC approval did not give Verisign antitrust immunity with regard
to the agreement, which is certainly a ray of hope that could possibly keep
them from exploiting the advantage they now have over other registrars,”
Erlich said. “Apparently this must have been the sticking point that held
up the decision
all week.”

A DoC official said ICANN and VeriSign will take the conditions and
incorporate them into a revised agreement, which should be approved by all
parties in the coming months.

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