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Username: Merlin
Date/Time: Thu, March 8, 2001 at 8:58 PM GMT
Browser: Netscape Communicator V4.08 using Windows 98
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Subject: Dot-Com Hocus Pocus, The Remaking of a Monopoly


      Dot-com hocus pocus

The remaking of a monopoly


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 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.

For 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 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.
       These 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 increase?
       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 with protest.
       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.



Link: MSNBC Article

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