INTERNET REGISTRAR UNDER ATTACK

August 18, 2000

FEATURES & COMMENTARY

New York, N.Y. — As unique Internet addresses become scarcer, the company that long held a monopoly on registering them is under attack for keeping thousands of valuable names.

Some critics are accusing Network Solutions Inc. of trying to profit off the simpler names that can sometimes command thousands, even millions of dollars in the resale market. Others say the unexplained delays in recycling older names leave an impression of favoritism for insiders.

“It’s very frustrating,” said Rick Rotondi, a Charlotte, N.C., book publisher eyeing dozens of names that have long expired. “There needs to be a policy for when the names come on the market.”

Rotondi is considering a monogram business in which individuals could get e-mail addresses based on their initials – such as hjm.com for Hank J. Miller. Records show combinations such as hjm.com expired last year but are still unavailable for him to obtain.

Hjm.com was registered to a New York-based HJM Consulting, though the rights expired last November. The phone company had no current listing for HJM Consulting.

The latest controversy over Internet addresses means new headaches for the Internet Corporation for Assigned Names and Numbers, an international organization with ill-defined powers to oversee global naming policies.

Although ICANN plans to expand the pool of addresses next year, names ending in “.com” are likely to remain the most popular and thus command the most dollars. Four-fifths of the more than 19 million domain names registered are dot-coms.

Companies, groups and individuals can register a new name for a basic registration fee – $35 a year in the case of Network Solutions. If they no longer need the name, they can let it expire, or try to resell it through auction brokers such as GreatDomains.com.

Names registered earlier tend to be shorter and easier to remember, making their Web sites easier to find. So used names are often more valuable than new ones – consider a Houston entrepreneur’s resale of business.com for a record $7.5 million.

“Everything has been bought up,” said Jeff Tinsley, chief executive of GreatDomains. “People are forced now to get extremely creative, adding hyphens or three or four words at the end.”

Earlier this summer, Network Solutions announced plans to enter the lucrative resale market – but with a twist. Instead of only letting owners auction their own names, the company said it would also resell names with delinquent accounts.

The Herndon, Va.-based Network Solutions said it is entitled to do so to recover unpaid registration fees. Competitors believe the company should return them to the general pool to give all registrants access to the better names.

Because Network Solutions remains the sole keeper of the master lists of names, competitors say it is generally the first to know when a name becomes available. Grabbing such names to resell on its own, critics say, amounts to an abuse of its former monopolistic power.

“NSI was a monopolist and is hoarding names without any real oversight,” said Elana Broitman, policy director at competitor Register.com. “That’s going to be a concern.” The company, however, said it keeps the two sides of the business separate to prevent any unfair advantage.

It’s unclear just how many names are involved. Competitors estimate that Network Solutions is keeping 1 million to 3 million expired names. Company spokeswoman Cheryl Regan said the company does not disclose such figures.

Regan said the new policy applies only to names registered after competition began last year in the registration realm. And she said prices would be no higher than the uncollected fees.

“We were using this strategy to recoup our losses,” she said. “The best analogy is to look at it as repossessing an asset.”

But one competitor, BuyDomains.com, found the company also retaining several older names such as CentralControl.com and Fineline.com, the rights to which are listed as having expired. Although Regan said the company had no plans to resell those names, she could not explain why they are still unavailable.

One critic points to the dispute as yet another reason to abolish ICANN and build a new oversight agency from scratch, one with well-defined roles and policies to prevent any abuse.

“The Internet is rapidly becoming the underpinning of most of our technological structure,” said Lauren Weinstein, co-founder of People for Internet Responsibility in California. “You can’t do this ad hoc and have problem after problem hitting you.”

ICANN’s chief policy officer, Andrew McLaughlin, said the agency will discuss new policies at its annual meeting in November. In the meantime, Network Solutions has agreed to delay its plans to resell repossessed names.

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