Settling a long-running dispute, Network Solutions and the US Commerce Department agreed on a deal that lets the company retain control of its database of Internet addresses but requires it to sell addresses to competitors at a steep discount.
As part of the deal, the company agreed to pay a set of annual registration fees that will help provide funds for the Internet for Assigned Names and Numbers (ICANN), the cash-strapped group created to manage some of the Internet's technical functions. Upon signing of the contract, Network Solutions will pay ICANN $1.25m to cover next year's fees.
Although a contract hasn't been signed, Network Solutions has agreed in principle to allow competing firms to register Internet addresses for $6 a year, a sort of wholesale price that is much cheaper than the $35 a year it charges consumers. The four-year deal also calls for competing domain-name sellers to pay Network Solutions an annual $10,000 fee for access to its database.
Network Solutions surged $12.6875, or 17 percent, to $85.50 in Nasdaq Stock Market trading Tuesday.
More than five years ago, before the World Wide Web evolved into a consumer medium, Network Solutions won a federal government contract to be the exclusive registrar of Internet addresses in the ".com", ".net", ".org" and ".edu" domains. In 1998, Network Solutions registered 1.9 million Internet addresses, nearly doubling its 1997 tally. Last November, the federal government granted the newly created ICANN the authority to introduce competition into the domain-registration market. That process has been under way ever since.
The organisation has accredited 76 companies around the world to compete eventually with Network Solutions. But, the introduction of competition has been hindered by the major disagreement between Network Solutions and the Commerce Department over who owns the master list of Internet addresses. When companies develop products while under government contract, those products generally remain the property of the company. That was essentially the argument of Network Solutions; the Clinton administration disagreed.
In a news conference at the Commerce Department Tuesday, Andrew Pincus, general counsel for the agency, said the disagreement is moot, because Network Solutions has agreed to make its database available to the public. Commerce Secretary William Daley called the occasion "a landmark day for the Internet", adding that he is heartened the negotiations took place "around a conference table, and not at tables in a courtroom".
The agreement also offers Network Solutions an incentive to separate its registration business from its functions as a wholesaler for other Internet-address sellers. The Commerce Department told Network Solutions that if the company can separate its wholesale business from its role as a retail seller of domain names within 18 months of the signing of the contract, the agreement would be extended for an additional four years.
As part of the deal, Network Solutions also agreed to:
- Recognise ICANN's authority in a signed contract.
- Give the Commerce Department control of the Internic Web site, a public-access entry point to the database of addresses.
- Contribute annual fees of as much as $2.25 million toward ICANN's operations.
Both government officials and Network Solutions' executives appeared pleased with the outcome of their long negotiations. "This really lifts the cloud off the [competition] process," said Network Solutions spokesman Chris Clough.