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Congress roasts NSI at ICANN hearing

New CEO catches roasting, fluffs pitch badly

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The rhetoric was rough, mean-spirited, and distinctly partisan when the House Commerce Committee convened Thursday over the question, "is ICANN out of control?" Nonprofit ICANN, the Internet Corporation for Assigned Names and Numbers, was created by the Clinton administration last year, ostensibly to promote competition in the domain registry system. Competition, all right; but thus far its single greatest product has been controversy. The Democrats rushed onto the field, attacking not the marquee attraction, ICANN, but Virginia outfit Network Solutions, Inc., which holds a virtual monopoly on the perennially attractive .com, .org, and .net domain suffixes. NSI, not surprisingly, has been somewhat reluctant to transfer its pot of DNS gold to trust buster ICANN, created to redistribute the hotly contested wealth. Rep. Ron Klink (D--Pennsylvania) accused NSI of dragging its feet for profit: "The longer you drag it out, the more money you're making. And the longer you hold [the monopoly], that's gravy running all over your plate," he exclaimed. Rep. Bart Stupak (D--Michigan) also weighed in against NSI for holding up the inevitable succession with its endless objections to ICANN's legitimacy. Indeed, it was chiefly as a result of NSI's lobbying against ICANN that the hearing was called, and a great irony that they found themselves the central object of Congressional interrogation. "It seems to me that NSI questions the very authority of ICANN's existence," Stupak observed. "It sounds like a classic delay tactic." Network Solutions CEO Jim Rutt, a Capitol Hill newcomer only two months into his tenure at NSI, received a baptism by fire from the contentious Congressmen. His performance under fire was amateurish and unfortunate. He perspired in the spotlight; he evaded questions; he huddled with his lawyers repeatedely; he muttered again and again that he "would have to get back" to Congress on some of its most pointed questions. "We are in a fiercely competitive market," he whined, appealing to the fact that NSI is but one among nearly 250 competing domain registrars. But until recently, NSI was the only one permitted to register domain names ending in .com, .net, and .org, which, Rutt eventually confessed under aggressive grilling, represent nearly 80 per cent of names. He was, sadly, trying to spin the spinmeisters. Clearly a crash course in Cicero and an acting coach are in order. In another spectacular PR blunder, Rutt attempted to minimise the importance of his company's DNS registry with a badly miscarried sour-grapes appeal. He had come on board, he said, to help NSI grow in numerous directions, "and become an aggressive competitor in a fair and open market rather than waste my time and everybody else's in the industry on, frankly, small-change matters." Pennsylvania's Klink rounded on him: "Are you saying that the kind of money that NSI has been making off its virtual monopoly is small change," he asked sharply, as the company earlier that day had reported its 11th consecutive profitable quarter. "I'm saying that the money we are going to make off our other businesses is larger than what we will lose by what we will be giving up," Rutt warbled. ICANN, meanwhile, had preemptively defused much of the criticism surrounding its recent naughtiness by dropping its controversial proposal to assess a $1.00 US surcharge on all DNS registrations, and by agreeing to open its board proceedings to public scrutiny. But House Republicans managed to rattle their cage by circulating a March email message from an ICANN lawyer to the US Department of Justice urging the department to "increase the level of pressure" on the Department of Commerce to investigate NSI. ICANN lawyer Joe Sims maintained that his contact with Justice was proper. He'd done nothing more than merely ask them to act in their role as advocates, he promised. Network Solutions rep Chris Clough characterised the contact an abuse of power. "I think the idea that ICANN can call on the Attorney General and the Department of Justice to put pressure on NSI is shocking," he crooned. Shocking or not, Justice is now examining NSI's claim - which CEO Rutt repeated endlessly throughout the hearing - that the company owns the collection of names it has thus far amassed. The pressure from Justice may have been inevitable anyway, as it gives the Commerce Department some needed leverage. NSI remains deadlocked with Commerce on the pending agreement to open its registry to competitors, on the question of whether or not it actually owns the names the registry contains, and over its flat refusal to recognize ICANN's legitimacy. When NSI's contract with the government expires in September 2000, the power struggle will intensify mightily if it's not nipped in the bud. Under current plans, NSI is to maintain a master registry to which its competitors, presumably, will have access. Andrew Pincus, a Commerce Department counsel, said that the Clinton administration and NSI remain at loggerheads over several issues, most importantly the fee Network Solutions will be permitted to charge competitors for access to its data. In spite of Rutt's insistent claim that the company owns the database, Pincus indicated that Commerce could well relieve them of it and solicit bids for a more cooperative outfit to take it over. So there. The gambit here of course is to avoid a lengthy court battle between NSI and Commerce by threatening one. Apparently it's working. "We're negotiating [with ICANN] at a pretty good clip," Rutt admitted. ®

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