October 14, 1997 6:15 PM PDT

Domain fund marked for next Net

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Congress has finally tapped a $34.2 million fund set up to "preserve and enhance" the infrastructure of the Internet, but questions remained today as to how the rest of the money will be used.

Drawing from Net domain registration fees, the National Science Foundation created the fund as part of its agreement with Network Solutions to administer the official U.S. registry for top-level domains, such as those ending in ".com" and ".net."

The agreement will expire between March and September of next year, but over the past five years, Network Solutions was supposed to have deposited 30 percent of every $100 domain registration fee into the account. In addition, the "intellectual infrastructure fund" is earning several million dollars in interest each month, according to the NSF.

During last month's House Science Committee hearings on the future of the domain name system (DNS), the fate of the intellectual infrastructure fund was often the central focus as Congress members wondered how the money would be spent.

As part of a huge appropriations bill sent to President Clinton last week, Congress earmarked $23 million of the fund for the NSF in carrying out the White House's Next Generation Internet (NGI) initiative. The NGI aims to create advanced online applications and route data at 1,000 times the speed of today's Net. Backers have been struggling to garner $100 million for the plan, which is about $5 million short now.

"When that account was initially set up, no one had specifics in mind as to how it would be used exactly," said Beth Gaston, a spokeswoman for the NSF. "The Next Generation Internet fits with our goal."

In the past, Network Solutions submitted proposals for the fund's use. An ad hoc group that plans to compete with the registrar when its contract expires had also asked Congress for a piece of the money pie.

"We did ask for a small percent for the setup of our global registrars, but I don't expect anything from them," said Donald Heath, president and CEO of the Internet Society, which is pushing an alternative domain name registration system that would be run out of Switzerland. More than 50 companies have already applied to become registrars.

Although the NSF never touched the money, there are questions about whether Network Solutions will owe payments to the fund when the contract expires. The NSF inspector's office released a report in February stating that by September 30, 1998, Network Solutions would owe $120 million to the fund based on the estimated $400 million it should have collected by that time in registration fees.

However, the money may not be there if Network Solutions fails to collect delinquent registration fees or renewals. "This is the minimum estimate of available funds because Network Solutions is owed additional fees for domain name registration," the inspector's report stated. "If a person or entity registered or renewed a domain name, then it is obligated to pay, and under the terms of the cooperative agreement, Network Solutions is obligated to collect. Accordingly, this revenue is owed to the pool."

The NSF's inspector plans to audit the company when the contract expires. "The account is 100 percent current," Network Solutions spokesman Christopher Clough said today.

Now that the multimillion dollar account is on Congress's radar screen, there is no doubt the government will be counting every penny while dreaming up more ideas for its use. "A pot of money sitting out there is always vulnerable," said one Congressional staffer.

 

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