US government approves dotcom contract

The United States government has approved a revised contract for ownership of the dotcom registry, solving one of the biggest problems at the heart of the internet, but also lighting the fuse on an almighty international argument over Net control.

The Department of Commerce announced yesterday that it has amended and then approved a highly controversial contract for ownership of all dotcom domains, awarding the registry to current owner VeriSign until 2012.

But the most fundamental change to the contract, which will see the US government personally decide on any dotcom price rises and whether VeriSign will be allowed to renew its ownership of the registry in 2012, is likely to cause international consternation.

For one, the revised contract now allows the US government to decide what happens with the internet's most important properties based on what it, and it alone, decides is in the "public interest". But more fundamentally, the USG will decide on the dotcom contract in 2012 - three years after it should have ended its control of the internet's overseeing organisation ICANN and allowed it to become an autonomous international body.

What that means in reality is that even if the US government sticks to its promises this time around and releases ICANN from its grip in 2009, it will still retain control over who owns the internet's most important property - the dotcom registry. That news is likely to infuriate international governments already annoyed at what they see as US government duplicity. It also raises the worrying possibility that the USG will go back on its word a second time and insist on retaining oversight of ICANN when its "Joint Project Agreement" with ICANN ends in three years' time.

The announcement is likely to be the subject of hot debate at ICANN's meeting starting on Monday in Sao Paulo, Brazil.

Quick history

The contract drawn up between internet overseeing organisation ICANN and VeriSign faced universal criticism when it was first unveiled last October. It gave VeriSign control of the registry forever, allowed it to raise its prices by seven percent a year, and gave it extraordinary powers over all dotcom domains and the information related to them.

The outcry prompted some minor concessions and a revised contract was produced this January. That however was also attacked and ICANN was accused of being hopelessly compromised in its negotiations because in return for the contract, VeriSign had agreed to accept ICANN's authority, end a series of ruinous lawsuits against the company, and pay the organisation millions of dollars.

The ICANN Board formally approved the contract on 28 February, with nine voting in favour and five against. That decision was itself mired in controversy when ICANN put a 48-hour gagging order on Board members which meant internal criticism of the decision only appeared several days later.

Since the contract required the formal approval of the DoC however, a number of US Internet companies approached their Congressional representatives asking for a review. A series of meetings and hearings over the contract were held in Washington DC, culminating in two Commerce Committee meetings in September and, finally, yesterday's announcement.

And the winner is... VeriSign

The result - where VeriSign gets everything it wanted but with changes having to be approved by the US government - is the best possible result for a company that has, in one form or another, been at the head of the commercial internet from day one. VeriSign has famously powerful connections within the US political system and has frequently used them to shape debate over the Internet to its own benefit.

That VeriSign's contract will now be decided in 2012 not by ICANN - which VeriSign will now accept has authority over it - but by the one organisation over which it has more influence than anyone else, is a huge boon to the company and means it will continue to profit from the internet's largest registry. The premium on dotcom domains is likely to continue for at least another five years, despite widespread expansion of the internet's "top-level domains". And by standing outside competition in the rest of the market, VeriSign will be able to charge increasing sums each year for the 50 million dotcoms in existence even while the market trend is toward cheaper domain names.

In short: VeriSign has won another battle against the interests of internet users thanks to domestic US political influence. The fact that a decision with global implications was again decided by a few Congressmen in Washington - who then wrote into the agreement another six years of power over the internet - however, risks stirring up an already volatile international situation over control of the Internet.®

Related links

NTIA announcement
ICANN website outlining the long battle with VeriSign
ICANN Sao Paulo meeting website