"Unanointed" Registrars Worry About Their Future

[Michael Sondow <msondow@iciiu.org>]

COMPUTERGRAM INTERNATIONAL: APRIL 29 1999

"Unanointed" Registrars Worry About Their Future

By Nick Patience 

Even though none of the five companies chosen to be one of the 
five test-bed domain name registrars has actually got its 
system up and running yet, their competitors are concerned 
about what the effect of being excluded from the test phase 
will have on their business. 

The test is scheduled to run from April 26 through June 24, 
after which the opportunity the register names in .com, .net 
and .org will be opened up to all companies accredited by the 
Internet Corporation for Assigned Names and Numbers (ICANN). It 
has already accredited 29 companies, in addition to the five it 
chose for the test period. One that has not been accredited yet 
is Network Solutions Inc (NSI), the keeper of the registry as 
well as hitherto the only registrar for domain names in .com, 
.net and .org, under its agreement with the Department of 
Commerce (DoC). 

Some of the five test-bed registrars are expected to be up and 
running some time next week, while others, like America Online 
Inc are apparently a few weeks off being ready. They will pay 
NSI $18 per name for two years registration, as NSI controls 
the registry. It negotiated that price with the DoC, rather 
than ICANN, which currently has no powers to set pricing. 

While the five companies may face problems from potential bugs 
in the system and the bad PR that some sort of failure will 
inevitably bring, those on the outside that have also been 
accredited are also worried about their future. If the system 
works reasonably well, the first five will get a head start on 
their competitors. Meanwhile, those companies that are excluded 
will still have to register through NSI at the full price of 
$70 per name for two years and make whatever they can on top of 
that. Although AT&T Corp, RCN Corp and Verio Inc are among the 
forthcoming registrars, some of these companies are very small 
and a bad two-month period could put some of their futures in 
jeopardy. 

The company that appears to have spotted this problem first is 
NameSecure.com, which applied to be a test-bed registrar, but 
had to make to do with accreditation for the post-test phase. 
Jeff Field, the company's founder and president says that ICANN 
has told him that it is the responsibility of the DoC, not 
ICANN to set pricing and its job is to "foster competition." 
ICANN confirmed its position to us. Field argues that 
competition cannot happen if companies are not able to compete 
because they are at a pricing disadvantage set by the DoC. 
Field has pointed this out to the DoC and it is said to be 
looking into the situation. Nobody at the DoC was available for 
comment. 

Chris Bura, the chief executive of Alldomains.com, another of 
the accredited companies outside the test-bed, says there is 
the option of registering their names through the test-bed 
registrars, but there is no incentive for them to provide such 
a service and obviously no reason why they should offer their 
would-be competitors a price lower than NSI offers. Field says 
the DoC has also suggested this as a possibility, but says his 
systems interface with NSI and to try and switch that to one of 
the test-bed registrars would not be viable in the 60-day test 
period. The alternative is just passing on the registrant for 
Register.com or one of the others to process, but Field says it 
competes "head-to-head" with Register.com and has no intention 
of helping it and the other companies by funneling its 
customers through them. 

A potentially more serious problem has arisen for 
NameSecure.com in that some of its contracts with partners 
gives those partners the right to break the contract should 
NameSecure.com become non- competitive in the market for 
whatever reason. Field reckons the test-bed phase should be 
merely a technical exercise, not one where the pricing model 
has changed. He suggests that everybody should have to register 
names at the current $70 tag and then set a date at which point 
everybody can compete at a lower registry price. But the 
test-bed registrars argue they are taking the risk of using the 
new systems and therefore should be able to make some money out 
of it. 

Larry Erlich, a partner at Domainregistry.com, which has also 
received accreditation for the full competition phase says the 
price should be tagged at $18 for companies during and after 
the test-bed phase. He argues that the risks from potential bad 
publicity from system crashes and the like is outweighed by the 
level of exposure the five "anointed" registrars, as he calls 
them, will receive. "There's no such thing as bad publicity," 
he says. He doesn't believe the industry would swallow a flat 
$70 fee, as it does not signal much of a move towards 
competition and away from NSI's monopoly. Erlich does not see 
the situation changing during the test period. 

Bura is worried that the test phase may drag on longer than the 
60 days and if it does the public will probably become aware 
that there are alternatives to NSI, depending on the success of 
the test-bed company's marketing efforts, which are 
non-existent right now.