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VeriSign Maintains Hold on .net Domain

By David McGuire
washingtonpost.com Staff Writer
Monday, March 28, 2005; 11:23 PM

Internet addressing giant VeriSign Inc. is almost certain to retain control of .net -- the world's fourth-largest Internet domain and one of the Web's most vital pieces of infrastructure -- after beating out several other companies in a competitive bidding process, Internet authorities announced Monday.

Late Monday night, the group that oversees the Internet's worldwide addressing system -- the Marina del Rey, Calif.-based Internet Corporation for Assigned Names and Numbers (ICANN) -- posted the findings of the independent panel charged with choosing the .net domain's next operator. The group picked Mountain View, Calif.-based VeriSign, which already operates the domain, over four other bidders.

_____ICANN Headlines_____
Ruling on '.us' Domain Raises Privacy Issues (washingtonpost.com, Mar 4, 2005)
Firms Bid to Control .net Addresses (The Washington Post, Jan 20, 2005)
Race Is On for Control of Key Internet Domain (washingtonpost.com, Jan 19, 2005)
Tech Policy Section

VeriSign once operated .com, .net and .org in a U.S. government-approved monopoly of the Internet addressing system. In 1999, the company signed a deal with ICANN under which it agreed to relinquish .org and throw .net open to competitive bidding in exchange for retaining near-permanent control of .com. But the deal permitted VeriSign to submit its own bid for .net and the company campaigned to keep the domain.

ICANN will immediately begin negotiations with VeriSign officials on a new .net contract, ICANN spokesman Kieran Baker said. Only if those negotiations fall through would ICANN consider the second-ranked bidder, Sterling, Va.-based NeuStar, he added.

"The evaluators find that all the vendors have the capabilities to run the .net registry," said a bid-evaluation report by Telecordia, the Piscataway, N.J., company enlisted to review the proposals, according to a statement from ICANN. "The distinguishing characteristics are largely difference in experience, risk and price."

Dot-net is the world's fourth largest Internet domain behind .com and the sovereign domains of Germany (.de) and the United Kingdom (.uk). Its 5 million Internet addresses are a fraction of the 35 million-plus registered in .com, but .net plays a critical role in directing the world's Internet traffic.

VeriSign Inc. has said that $700 billion annually in Internet commerce -- nearly 30 percent of the total -- travels through the domain. Nearly 150 billion e-mails pass through .net addresses every day. Internet customers of Comcast, AT&T and EarthLink all are given e-mail addresses ending in .net. VeriSign will also keep collecting roughly $30 million a year in .net registration fees.

As the registry operator, VeriSign is effectively the "wholesaler" of .net addresses. Under the existing contract, every time a retailer or "registrar" sells an address ending in .net, the retailer pays VeriSign $6 a year to maintain that name in the master registry.

If the registry were to fail or become unavailable, huge swaths of the Internet supported by .net could go dark. VeriSign used that to its advantage in the bidding process, arguing publicly that moving .net to a different operator was inherently risky and would unnecessarily jeopardize vital Internet traffic. Other bidders rejected those arguments, pointing to the successful transfers of other domains (like .org) and accusing VeriSign of scaremongering.

The runner-up, NeuStar, which would take the helm of .net if VeriSign failed to reach an agreement with ICANN, was founded in 1999 as a corporate spin-off of Lockheed Martin. In 2000 the company won the bid to operate .biz, one of seven new Internet domains created by ICANN to ease crowding in the "big three" of .com, .net and .org. The privately held company's main business is maintaining the registry of U.S. telephone numbers.

NeuStar's bid proposed that the company operate .net through a joint venture called Sentan Registry Services Inc., in which a 30 percent stake would be held by Japan Registry Services Co., the company that manages Japan's .jp domain.

The other three .net bids came from European companies: Frankfurt, Germany-based DENIC, the operator of .de, Dublin-based Afilias, operator of .info, and Barcelona-based CORE++.

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