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Internet's .Net Goes Out For Bid

VeriSign's management contract for the domain expires next summer and several companies are ready to compete for it

With management responsibilities of the .net domain soon to be up for grabs, several groups are positioning themselves to snatch the domain from its current steward, VeriSign Inc. The Internet Corporation for Assigned Names and Numbers, a non-profit corporation that manages the Internet Domain Name System, Friday will issue a formal request for proposals in its quest to ensure .net's smooth operation for years to come.

VeriSign's registry agreement with ICANN, originally signed in May 2001, will expire on June 30, 2005. ICANN is expected to invite bids through March 2005 for the new contract and submit its candidate to the U.S. Commerce Department, which oversees ICANN, for final approval. The companies most likely to bid on the contract agree that proper care of the domain is essential to the Internet's future. domain has a disproportionate impact on the economy, says Tom Galvin, VeriSign's VP of government relations. Although there are more than 30 million entities registered with .com addresses, many, including and, actually run over a .net transport layer. VeriSign is the registry for .com, the world's largest Internet domain.

"Thirty-seven of the top 100 Web sites rely on .net, and about 37% of all E-commerce relies on .net to get to its destination," Galvin says, adding that despite the fact that .net has only about 5 million registered entities, about 150 billion E-mails flow through the domain daily. "It's vitally important that a year from now .net runs at least as well as, or better than, it's running now."

Germany's Deutsches Network Information Center, or Denic, plans to compete with VeriSign to win the .net contract. Sabine Dolderer, a member of Denic's executive board, agrees with Galvin's assessment of .net's role in the Internet's future. The Domain Name System is a fundamental part of the Internet infrastructure affecting all companies that rely on the Internet as part of their business models, she says. "If the infrastructure goes down, business goes down."

Denic, which already serves as the registry for the largely German .de domain and its 8 million users, asserts that operation of registries such as .net is best left to non-profit organizations that don't have to develop a profitable business model. Denic has shown it can run a registry the size of .net, Dolderer says. The company also is hoping that its support for international characters, a feature that lets it address the needs of local markets, will help in its bid for the contract. Internationalization of domains means that international communities won't have to learn Latin characters just to use the Internet, Dolderer says.

Any domain registry must also be prepared to accommodate the Web's growth, Dolderer says. Thanks to the growing number of users and devices " cell phones, PDAs, watches, etc. " accessing the Internet, traffic on the servers that manage domain names is doubling every three months, she says.

Other registries expected to compete for the .net domain are NeuLevel Inc., which oversees the .biz registry, and Afilias Ltd., which manages more than 5 million .info and .org domain names.

The ability to transition .net domain data from VeriSign will be crucial to any organization looking to win the bidding process, says an Afilias spokeswoman. She points out that Afilias made such a transition, albeit on a lesser scale, when it began in 2003 managing the .org domain's more than 3 million names for the Public Interest Registry, a not-for-profit corporation created by the Internet Society specifically to manage the .org domain.

VeriSign's relationship with ICANN can at best be described as rocky. In February, the company sued ICANN in the Central District of California federal court, charging that ICANN improperly attempted to regulate VeriSign's authority over the DNS and interfered with new services VeriSign attempted to offer its customers. A federal judge in May dismissed VeriSign's primary antitrust claim against ICANN, indicating that ICANN hadn't broken antitrust laws in restricting the types of services VeriSign can offer.

In October 2003, ICANN forced VeriSign to cease offering after only a few weeks its Site Finder service, which directed Internet users who mistyped domain names or attempted to connect with nonexistent Web sites to a search page offering listings of similar domain names and popular categories related to the search request. Site Finder would destabilize the Internet's naming and address allocation systems, ICANN said.

VeriSign on August 27 filed a lawsuit against ICANN in California State Supreme Court, this time alleging that ICANN violated its 2001 .com Registry Agreement with VeriSign by not allowing the company to offer a number of services, including Site Finder and Wait Listing Service, which would allow users to pre-register for domain names. The company stated that these services helped VeriSign be more competitive with other registries and that the loss of these services has cost it revenue, market share, and good will with the Internet community. VeriSign wants to be granted the right to reinstate its services and be compensated for any lost revenue their suspension caused. The suit is still in state court, pending judicial review.

VeriSign's Galvin says his company's lawsuits shouldn't be held against them as ICANN decides on a new manager for .net. "We hope the decision on .net will be based on merit," he says. "The dispute is where ICANN's authority is to dictate services. We're looking for clarity." ICANN says it will use an independent third-party firm to manage bidding and selection processes.

One thing's for sure, the winner will be taking on a lot of responsibility for the future of the Internet. It's a responsibility not to be taken lightly, even if most of the Internet's users take domain services for granted.

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