Network Solutions Inc. (NSOL) -- the company currently holding the monopoly on Internet domain-name assignment and registration through a government contract -- greeted with open arms today the Clinton administration's new policy on how to overhaul the domain name system.
It stands to reason. In light of the new policy, analysts say, Network Solutions is likely to keep its stranglehold on the .com, .org, and .net domains.
The administration ended up scrapping earlier plans, which would have quickly added more names to the system and called for competition in the registration process.
As suggested in the January draft of the policy, the government still plans to end its role in the name system by 30 September 2000. But absent in the new policy are plans to introduce competition or create new generic top-level domains. Instead, this draft turns over some of the trickier questions to a new nonprofit agency to include representatives. The agency's 15-member board is to include representatives from private-sector, Internet, and consumer groups.
"Our conclusion is that it is good news for Network Solutions, the industry, and most important, our customers," said Network Sollutions chief Gabriel Battista, who called the situation a "win-win" situation. Network Solutions' stock acted optimistically as well -- it shot up more than six points on Friday after the Clinton plan was released.
Network Solutions operates under an exclusive contract with the National Science Foundation that expires this September. The new policy calls for "ramp-down" talks between the government and the company as part of a transition that will see Network Solutions become "one competitor among many."
Who those competitors would be is still something of a mystery. In a conference call with reporters, Battista said no clear competitors have yet emerged.
But Battista said that Network Solutions will play a large role in the future planning of the new competitive market.
"We will have a major role in this transition and in the development of a nonprofit corporation ... making sure [the Net] works every day as the Net evolves," he said.
The plan's proposed nonprofit corporation would take over the government�s current role of various responsibilities for DNS administration that are now mostly performed by or on behalf of the US government, according to Becky Burr, associate administrator for the National Telecommunications and Information Administration.
"Anybody who is going to be affected by standards that can get set can participate in the decision-making process," said Burr. "The government will not be setting up the new not-for-profit corp. The private sector would set it up. "I have already been getting emails about meetings taking place to start talking about this process," said Burr. �One of the models we have suggested [for the group] is a standards-setting body.�
Burr said that the new body would decide things like whether Network Solutions will operate all three of the .com, .net, and .org top-level domains, or whether it must write software to allow for the sharing of the three domains.
"We want them to say, 'Yes we will recognize the authority of this new entity and agree to be bound by [their] terms,'" said Burr.
Battista emphasized that Network Solutions feels ready to take on any comers.
"No one [else] has the breadth of knowledge gleaned from 2 million customers," he said. "What we've been doing for last few years is preparing ourselves for that competition."
Indeed, Network Solutions chief financial officer Bob Korzeniewski said that the company's investment in back-office infrastructure is in excess of US$20 million, with more investments on the way. Battista cited the company's marketing relationships with 50-some Internet service providers and web hosting companies as more evidence of its strong presence.
Analysts are not surprised to see Network Solutions emerging dominant.
"They will do fine through the raw growth in domain name registration alone," said Rick Miller, analyst at International Data Corp. "We have them pegged at 40 percent growth [per year] for the next three or four years, and we took into account competition. There is nothing in the white paper completely detrimental to their business."
The white paper prescribes that, during post-contractual negotiations, Network Solutions will agree to "make available on an ongoing basis appropriate databases, software, documentation thereof, technical expertise, and other intellectual property for DNS management and shared registration of domain names." Battista was vague during the press conference, saying only: "I think the important thing is that we believe appropriate information [will be] made available to facilitate competition."
Said IDC's Miller: "Whatever nonprofit organization is set up to handle the transfer ... NSI has to be the advisors in that transfer. They are the ones in possession of that the data right now.... They are not going to shoot themselves in the foot by giving anything away that would be too damaging to their business on the private side."
Indeed, the new policy is hazy.
Said Network Solutions senior vice president Don Telage: "The devil is in the details."
Reuters contributed to this report.
