June 25, 1999 2:55 PM PDT

NSI won't sign on with ICANN

Internet domain name registrar Network Solutions turned a contract with the government into a billion-dollar company, and just because it now has to welcome competitors doesn't mean it plans to take orders from the new body in charge of the Net's technical functions.

Despite the Commerce Department's hope for smooth See Don Telage Newsmaker transfer of power over the Net's infrastructure from the U.S. government and its contractors to the free-market private sector, Network Solutions--the world's primary domain name registrar--and the not-for-profit Internet Corporation for Assigned Names and Numbers are headed toward a painfully rigid stalemate.

Both entities have signed cooperative agreements with the government, but not with each other. The showdown between the sides has heated up in recent weeks, with public potshots being taken by both sides. The crux of the conflict is that ICANN says Network Solutions is obligated to comply with its rules for new registrars, but NSI disagrees with ICANN's accreditation agreement, calling it a "nightmare" for its company and shareholders.

Network Solutions has no intention of signing the agreement in its current form, executives told CNET News.com.

"Why would we give them the right to decide if we can be in the business--a business we've been in for six years? It's crazy," said Don Telage, NSI's senior vice president and a board member.

NSI contends that ICANN is supposed to be unbiased and has overstepped its bounds with its fierce public criticism of the company. ICANN counters that its public feud with Network Solutions was triggered as a stall tactic by the registrar to delay erosion of its monopoly.

"The [government agreement] says NSI must recognize the new corporation and sign a contract," said Mike Roberts, interim president of ICANN.

"Because it doesn't work for NSI to attack the government directly, and Wall Street doesn't like companies that take on the government, NSI is mounting a full-scale attack on ICANN as a proxy because they have serious contract problems with the government," he added.

Firms such as America Online already have signed the agreement as a condition of competing with NSI to register the most popular domains: ".com," ".net," and ".org." But if Network Solutions doesn't agree to ICANN's policies, the whole transition could disintegrate, observers say. The legal battles and other fallout that could ensue threaten ICANN's existence and could sever the friendly ties between NSI and the government.

The ongoing international wrangling over who will control the Net's address system often seems to be a tedious, highbrow debate. But the potential consequences stand to strongly impact everyday Net users and the millions of business that are or have become dependent on the global medium for distribution, advertising, and, for some, their very existence. Put simply: The entire network is dependent on the stability of the Net's address system, which is the foundation for the names ending in ".com" that have become a staple in the New Economy.

The NSI-ICANN impasse comes as the test-bed period for new registrars was scheduled to end, thus heightening pressure on the two sides to agree. Temporary relief came today when the Commerce Department and NSI extended the test period for its shared registration system until next month.

For now, Network Solutions is the primary landlord online, handing out keys to homes on the Net in the form of registered domain names. NSI also manages the Net's Root A domain server, which ICANN now is making plans to administer.

ICANN's main task, however, Net number system at a crossroads is to make sure the Net address system keeps running smoothly as more companies start registering domain names, and to add more names to the pool. It also has to deal with the web of trademark issues over Net names, along with managing Internet Protocol (IP) numerical addresses, which are translated into the easy-to-remember domain names.

On top of that, the interim board of the less than seven-month-old body is trying to create an unprecedented membership model made up of delegates, such as online companies and multiple nations, that will help shape its decisions.

Where Network Solutions and ICANN collide is over the latter's authority to make NSI do anything at all. ICANN's guidelines state that registrars must agree to its evolving trademark dispute procedure and other policies it devises, and that they escrow an electronic copy of their database in the event the accreditation agreement is terminated or expires without renewal, for example.

The deal-breaking sticking point for NSI is a provision laying out six reasons ICANN could terminate the registrars' accreditation, including that the "registrar acts in a manner that ICANN reasonably determines endangers the stability and operational integrity." ICANN will only give the registrar 15 days' notice before tearing up the agreement, and then an arbitration process could kick in.

It's no surprise Network Solutions is adamant about not signing any contract with ICANN that could put the nonprofit anywhere near the driver's seat of NSI's business. It's unlikely that NSI would ever violate the agreement--but it doesn't like the impeding threat.

"We were looking at ICANN as minimum standards-setting body, to set up minimum consumer protection measures so they wouldn't register with someone who couldn't keep their business online," Telage said. "But there are all kinds of specific business interfering terms in that agreement. There is no legal basis for that."

NSI says it would sign a limited bilateral operating agreement with ICANN concerning technical stability issues, for instance.

Still, ICANN expects, and has even insisted, that Network Solutions sign the accreditation agreement. During a board meeting in Berlin last month, board member George Conrades, who used to be with IBM, essentially asked NSI if it was in or out. And if it was out, it could be out of business altogether.

Stuck in the middle
The Commerce Department is trying to play referee behind the scenes, while trying keep things low key, observers say, because presidential contender Al Gore needs to play the high-tech card in his campaign and doesn't want this fight to become ammunition for partisan politics. But ICANN is firmly planted on the radar now. Congress already is calling for hearings to investigate ICANN's authority.

Amid this contentious debate, Commerce is holding up its optimistic face. Government officials won't pick a side, saying that Commerce's agreement with NSI "contemplates" that it will submit to ICANN's policies.

"I don't think it's in anybody's interest to put NSI out of business," said Commerce Department spokeswoman Becky Burr, who is overseeing the negotiations. "NSI wants to enter an agreement with ICANN and I take them at their word."

The disagreement over whether NSI has to sign on with ICANN comes down to a provision in NSI's revised cooperative agreement with Commerce, known as Amendment 11. The provision was agreed to before ICANN was anointed and outlines NSI's relationship with a nonprofit dubbed "NewCo," which would be recognized to manage the Net's technical functions. ICANN has become NewCo.

The agreement signed by Network Solutions states the following: "NSI acknowledges that NewCo will have the authority, consistent with the provisions of the Statement of Policy, and the agreement between the U.S. government and NewCo, to carry out NewCo's responsibilities."

That language alone is vague without a careful reading of the June 1998 Statement of Policy, which is based on a white paper by the Clinton administration.

The document describes how to "ramp down" NSI's cooperative agreement with the government, calling on NSI to "agree to recognize the role of the new corporation to establish and implement DNS policy and to establish terms, including licensing terms, applicable to new and existing [top-level domain] registries under which registries, registrars, and [top-level domains] are permitted to operate."

Does NSI have to play ball?
The big question is whether NSI's agreement with the government mandates it to agree to ICANN's registrar rules. Legal experts say it is unclear.

"NSI's agreement does contemplate that ICANN will have the power to dictate polices for all of the registrars and registries," said Eric Goldman, an attorney at Cooley Godward who represents online companies.

"I think that binds them," he added. "It could have been clearer, but it opens up the door to sweeping in everything from the white paper."

Others agree that Amendment 11 is not entirely clear, and that NSI could have jockeyed for language that would put it in a different category from new registrars.

"It is ambiguous enough to tie it up in litigation for a long time," said one Washington attorney who asked not to be named because he has dealt with both entities.

"NSI could have negotiated for a favorable position," he added. "But it's in a unique position compared to others who have signed the agreement, because it's being asked to put its core business under the control of an outside organization that's not accountable to their stockholders."

 

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