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VeriSign Spins Out Registrar

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ComputerWire logo Network Solutions Inc returned from the dead yesterday, as VeriSign Inc announced it has created a subsidiary named after the domain name company it bought in 2000, writes Kevin Murphy.

The company said the spinout is not a prelude to a planned sale of the business, rather an effort to better associate its mass-market retail services with the still highly recognizable NSI brand, and to keep VeriSign as its enterprise-level brand.

The unit will be presided over by Champion Mitchell, a VeriSign VP, and will be staffed with approximately 600 existing employees. NSI has had its web site revamped and has "simplified" the pricing of its add-on services such as web and email hosting.

The move may also be intended to distance VeriSign, rightly regarded as one of the internet's premier security brands with the tagline "The Value of Trust", from NSI, which is frequently associated with its legacy as a monopoly, its heavy-handed marketing tactics and historically poor customer support.

"While we realize we may have fallen short in some areas in the past, our visible efforts over the last year demonstrate we have rededicated ourselves to serving our customers," executive VP John Donoghue said in a statement.

The company was the first domain registrar, and held a monopoly on the .com, .org and .net space from 1993 to 1999. It is still the world's largest domain registrar, but has been accused by many of sitting back on its laurels and not adapting to the competitive market.

"We've been very candid and very frank about customer service issues in the past," spokesperson Patrick Burns told ComputerWire. "NSI in the past year has done a lot to improve customer service."

Burns said NSI will realize "efficiencies" with the spinout, and will be able to better market to its retail customer base. However, given the high level of segregation already in place at VeriSign, it seems the change in corporate structure may be slight.

For over a year VeriSign's registrar and registry divisions have been separated under strict rules designed to prevent the registrar getting an unfair competitive advantage. The so-called Chinese Wall rules were imposed as part of a deal that VeriSign inked with industry overseer ICANN, the Internet Corp for Assigned Names and Numbers.

Under an agreement that allowed VeriSign to keep its registrar in-house, rather than divesting it as agreed earlier, the company had to impose a separation of powers, so strict that even employees from the registrar are not even able to enter the offices of the registry, and vice versa. And the two businesses already have to keep separate accounts.

Last summer, an independent audit of this Chinese Wall conducted by Ernst & Young proved inconclusive. E&Y's report said VeriSign did not have enough information available to conclude whether the Wall was working properly or not. VeriSign's Burns said this had nothing to do with yesterday's move.

© ComputerWire

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