Dot-com hocus pocus
The remaking of a monopoly
Brock N. MeeksMSNBC
WASHINGTON, March 7 - The government breaks up malevolent monopolies.
That's what it's supposed to do in order to protect competition and consumers. It's
especially satisfying when a government-created monopoly is split asunder by the
same folks who created it. But when that monopoly is bolted together again, behind
closed doors and with no debate, by a government-appointed overseer, the process
is as suspect and smells as bad as week-old cheese.
THE INTERNET Corporation
for Assigned Names and Numbers (ICANN) announced last week it cut a deal with former
monopoly domain name registrar, Network Solutions, Inc., that once again cements
its monopoly status. The deal is a stunning refutation
of a public policy promise the Department of Commerce extracted from NSI a few years
ago. The original promise was that the company would spilt off the domain name registry
from its registration business in order to spur competition in the domain name registration
business. The domain name registry is the central database
that underlies the entire Internet. It holds all the information enabling your Web
browser to recognize that www.whatever.com actually belongs to a string of numbers
that resides on a certain computer in a certain place on the Web; it's like the Internet's
master telephone directory. There is only one registry;
it is a cash cow, a license to print money. There is no competition for this registry;
there is competition, however, for registrars. Dozens of companies are now able to
register a domain name for you and each time a domain name is registered by any company
other than NSI, that company pays NSI a $6 fee for maintaining that information in
the central database. The move to split NSI's registry
from the registration business was intended to strip NSI of its government created
monopoly status. Initially, the government created NSI as the sole registrar and
registry in order to ensure stability in the nascent wacky world of the Web.
PLEADING COMPETITION But last week's
agreement, which ICANN made with VeriSign, the company that swallowed up NSI last
year, now makes the Department of Commerce's original plan defunct, a sort of reverse
Microsoft breakup process, putting together what it once wanted broken in two.
Where once the government was concerned with NSI being a monopoly
that could run roughshod over the domain name industry, it now appears that merely
the intent of busting up the monopoly was enough because, hocus-pocus, the industry
apparently is so competitive that NSI is no longer a threat!
Indeed, under the agreement signed with ICANN, VeriSign will retain
control of the lucrative dot-com registry - and thus continue to scoop up wads of
cash for every dot-com name registered. The .net registry will be spun off if VeriSign
wants to, but the company has an option to retain control of this, too. And .org
will be turned over to a "non-profit" company of some undetermined sort.
VeriSign now says that its share of dot-com registrations hovers
around 40 percent; it once held 100 percent of those registrations. In addition,
there will soon be seven new domain names added to the current crop of .com, .net
and .org and each of those has its own registry. Therefore, with so much competition
in the market, ipso facto, no more monopoly.
Yet VeriSign is guilty of the same "fuzzy math"
Al Gore was branded with by President Bush during the presidential debates.
The dot-com registry holds an insurmountable edge on the rest
of the market, so competition from new domain names is nothing more than the same
speculative slight of hand practiced by government economists when estimating budget
surplus numbers. In addition, VeriSign, through its membership in a group of companies
known as Afilias, has its fingers in the new .info domain.
VeriSign already has a stranglehold on the domain registration industry that rivals
Microsoft's power in the software industry. All domain registrars are beholden to
VeriSign for their very business because VeriSign controls the master database.
example, each domain name registrar must pony up a large amount of cash to VeriSign
as a kind of "advance" on all the domain names it registers, according to Larry Erlich,
who runs DomainRegistry.com. That money is held hostage by VeriSign "without even
gaining interest," Erlich said. And it's not a pre-payment for future registrations.
VeriSign sends out invoices each month that must be paid immediately with additional
funds other than those already held by VeriSign.
smaller registrars are competing with the same company that literally holds the life
of their business in the bowels of its computers. The situation was only tenable,
Erlich says, because he thought the entire landscape would change when VeriSign was
forced to sell off the registry.
"Now the game is fixed,"
Erlich said. "In any way shape or form, it makes [VeriSign] a stronger company and
more formidable competitor."
And don't forget monopoly
power to raise prices. The new VeriSign contract gives the company the right to raise
prices with only 30 days notice. No debate, no public forum, they have a unilateral
right now to raise prices. And when the price is raised guess who is going to pay
The contract says every registrar must
be charged the same price, except that discounts will be provided to registrars doing
a lot of business. That puts smaller registrars at a distinct disadvantage and begins
to smack of George Orwell's "Animal Farm," where "All animals are equal, but some
are more equal than others."
Previously, the only way
that price could be raised was if ICANN changed its registration requirements or
by an act of Congress.
Now a price raise will be up
to a bunch of suits in a mahogany-paneled conference room trying to squeeze few tens
of millions onto the bottom line. PORKING THE .ORG
Perhaps the most insidious aspect of this reverse monopoly making
is what's happening to present and future holders in the .org domain.
In a letter from VeriSign CEO Stratton Sclavos to ICANN Chairman Vint
Cerf, the future of .org is played as empowering non-profits worldwide in a laughable
kind of "we are the world" word dance. In trying to sound
magnanimous about releasing control of the .org registry, Sclavos writes: "Our objective
is to provide a permanent and affordable home on the Internet for the non-profit
sector and in so doing make a major effort to close the digital divide on a worldwide
scale." But a look at the conditions surround the new
.org future shows that the ICANN-VeriSign duo has perverted .org's original intent,
which was to act as a digital harbor for Web sites that weren't commercial and "didn't
fit" anywhere else. Now .org will represent "the global
universe of non-profit organizations," Sclavos writes. No where is there any definition
of what constitutes such as "non-profit organization." Is that a U.S. type non-profit
or a non-profit in Belize, Bulgaria or Bangladesh? Some
critics fear that this perversion of dot-org is a covert attempt by the Intellectual
Property crowd to thwart the future establishment of "protest" sites, such as ACME-WIDGETS-SUCK.ORG.
Nonsense, scoff ICANN officials. "[T]he future of .org are policy
decisions that should go through the consensus process," wrote Joe Sims, a lawyer
working for ICANN that drafted the contract language.
Sclavos' letter does acknowledge that are "issues to be determined" in handing over
.org - implying that nothing is set in stone. ICANN, however, has already agreed
that "at a minimum" current .org owners should be allowed to keep their Web sites
"for one renewal cycle."
Seems to me that the wholesale
takeover of .org is a done deal; you lose, I lose, we all lose.
ICANN can spew all it wants about "consensus," but its version of consensus
has all the veracity of revisionist history. ICANN gives lip service to the idea
of consensus; this deal to reestablish NSI's monopoly, for example, began last summer
well hidden from public view.
The contracts aren't
official… yet. Ironically, there's an April 1 deadline for getting them approved.
That approval must come from ICANN's board of directors and the Department of Commerce.
And we can guess the outcome there.
You can voice your
concerns on the ICANN Web site; you'll be in good company, the boards are on fire
Or you act on the message that NSI might
have sent you recently to renew your .org domain name for the next 10 years.
I guess someone didn't get the memo that VeriSign won't even
own the .org registry in three years - let alone 10. Sign up for 10 years and you'll
be on your own and out of luck if the .org policy changes. And frankly, NSI could
care less as long as your check clears.