Dirt in the domain name game

WASHINGTON -- The global land rush for control of new Internet domains that will compete in dot-com space is beginning to take on the familiar stink of the Olympic games site selection scandal. A small cabal of insiders appear to be gaming the selection process that will soon determine who will win the right to control new domains such as .
Written by Brock Meeks, Contributor
WASHINGTON -- The global land rush for control of new Internet domains that will compete in dot-com space is beginning to take on the familiar stink of the Olympic games site selection scandal. A small cabal of insiders appear to be gaming the selection process that will soon determine who will win the right to control new domains such as .xxx, .kids or .web.

It all starts with the controversial organization known as ICANN or the Internet Corporation for Assigned Names and Numbers. The non-profit group was hand picked by the Department of Commerce to transition the assignment of Internet domain names from a monopoly to a competitive environment.

What ICANN has mostly done is create controversy with every decision, while turning itself into a de facto model for global Internet governance, a task it was never supposed to undertake.

The acrimony between ICANN and its legions of critics is as thick as the peanut butter on a two-year-old's sandwich. Truth is, ICANN has manufactured most of its own troubles, starting with a stupefying bent toward secrecy, while pledging to operate in a spirit of consensus and transparency.

ICANN's proceedings and board meetings have only recently been held out for public accountability and scrutiny. And that was a begrudging concession to a ground swell of public criticism.

Then just last week we learn that a crucial ICANN policy committee was created and is meeting secret. That committee is meant to provide recommendations on the implementation of certain aspects of the popular "whois" database, which lists the owners of Web sites.

One law professor has even stronger words for the ICANN debacle: "In lending ICANN its control" over the domain name space, the Department of Commerce "created a system in which social policy is made not by due process of law but by something that begins to resemble government-sponsored extortion," writes Michael Froomkin, a law professor at the University of Miami School of Law in a law review article for the Duke Law Journal.

There are three generic top-level domain names right now: .com, .org and .net. By far the most coveted is .com. However, the dot-com space has nearly reached its saturation point. Trademark conflicts abound. And just try to find an available two or three letter dot-com - you'd have better luck finding sweat on a dog's back.

That scarcity forced ICANN to choke on its hairball policy that new domains couldn't be introduced for fear of crashing the entire Net, and it began the process of taking applications to create new domains.

The ground rules noted that anyone could submit an application to run a new domain, a potentially lucrative business that can return hundreds of millions of dollars in annual revenue.

But the brutal truth is, ICANN didn't want just anyone to submit a proposal, so they imposed what amounted to a digital poll tax: all applicants had to pony up a non-refundable $50,000 check. Some 47 applications were received, pouring $2.35 million into ICANN's cash strapped coffers.

And none of the applicants is guaranteed it will get to run a new domain; ICANN hasn't even decided how many new domains to create. Estimates range from three to 12, but hundreds of new domains were proposed in the bidding.

But one group of players has seen to it that they have an inside track in being selected to run one of the new domains.

Members of a newly created company called the Afilias Group have, in one way or another, managed to get their hooks into more than one-third of the domain proposals. Members of Afilias include the current monopoly domain name registry owner, Network Solutions, Inc.

The "registry" is key and differs from a "registrar." There are dozens of the latter; these companies will register your chosen Web site name for a fee. But it's the Network Solutions registry that is the cash cow.

Every registrar has to pay a registry fee to Network Solutions for every new dot-com-this or dot-com-that it creates. The registry is the central clearinghouse that keeps track of all those domain names and its profits go only to Network Solutions, which is now owned by Verisign.

Afilias also counts CORE among its members. CORE grew out of a group that tried unsuccessfully, a couple of years ago, to pull off what can only be called the first coup d'etat in cyberspace. CORE set up its own company and registrars and said it alone would create new domains and be governed in U.N. fashion, under Swiss bylaws. The attempt failed and CORE was reduced to treading water waiting for ICANN to bless the creation of new domain names.

That Network Solutions is even being allowed to participate, in any way, in the creation of new domains is a travesty. The U.S. government created Network Solutions' monopoly in the first place and then spawned ICANN as a means to help introduce competition into the domain name market. ICANN apparently forgot to look up "competition" in the dictionary.

If one of a few new domains goes to "a group of registrars who collectively already have 98 percent of the .com, .net and .org market, one would have to ask, 'why?'" says Milton Mueller, Associate Professor, Syracuse University School of Information Studies. "It seems to be not only bad competition policy, but raises fundamental concerns about how ICANN operates, because the organization would appear to be incapable of awarding resources to anyone but its own insiders."

I suppose the real test of whether ICANN has the political will to "do the right thing" will come with its decision over who gets to run the .web domain, which surveys show is the most desired new domain.

Small catch: .web already belongs to Image Online Design.

Image Online Design has been running an alternative domain name registry using .web since 1996; that registry has attracted about 20,000 paying .web domain name holders.

ICANN has refused to recognize Image Online Design's efforts when in fact it could specifically set aside .web under a "pioneer's preference" exemption, much like the Federal Communications Commission has done when handing out slices of the airwaves to companies that have pioneered particular technologies.

Now Image Online Design finds itself fighting for what is clearly its own intellectual property. One of those bidding against it is - big shocker - the Afilias group.

Image Online Design CEO John Frangie said the Afilias bid for .web is led by the "world's greatest monopolistic force: NSI." Frangie then goes on to say that Network Solutions has "put together a cartel of 19 companies to capture even more market share," noting that the Afilias proposal is a "cynical attempt to enhance the entrenched monopoly of NSI" and thereby "perverting the very process that ICANN established to increase competition."

I couldn't have said it better.

And just finish off this murky tale, the other bidder for .web is listed as NeuStar, which as it turns out is really "JVTeam," a "new company formed by NeuStar and Melbourne IT," its application says. The latter of those two is a member of CORE and thus also a member of Afilias. Smell a trend here?

Wallow through this JVTeam bid for .web long enough and you come across this statement:

"JVTeam is prepared to meet with ICANN and discuss any legal issue relating to a .web registry. If necessary, JVTeam will indemnify ICANN for legal expenses incurred by ICANN resulting from any legal challenges brought regarding a grant of the .web registry to JVTeam."

I'm sure they didn't mean to try and bribe ICANN, but it sure sounds like the old comedy sketch where a conniving driver, pulled over for speeding, hands the cop his license wrapped in a $50 bill.

ICANN will deliver its decision on new domain names in November. The group can redeem itself, if ever so slightly, by outright dismissing all proposals from established players in the domain name space. But don't hold your breath.

Although ICANN says it is looking out for the stability of the Internet as it tries to micromanage the domain name space, that argument flies with the all the grace of a penguin. ICANN is cowed by big money interests. And money and power talk, in cyberspace, just as they do in the halls of Congress.

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