Name.Space on Thu, 25 Feb 1999 08:02:07 +0100 (CET)

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<nettime> NSI antitrust woes not over yet

NSI antitrust woes not over yet
By Dan Goodin
Staff Writer, CNET
February 24, 1999, 12:25 p.m. PT

Nearly two years after would-be Internet
registrar PGMedia accused Network Solutions in
court of violating antitrust laws, the suit
appears stalled over weighty legal issues and
procedural hurdles raised by the government's
recent attempts to privatize Internet

Bogging down the case is whether NSI, the
government-appointed monopoly registrar for the
most popular forms of Internet addresses, can
even be sued. Adding to the confusion is the
push by the Commerce Department to open up
registration competition later this year.

In a federal lawsuit filed in March 1997, New
York City-based PGMedia accused NSI of violating
antitrust laws by refusing to expand the number
of TLDs, or "top level domains," available in
the master directory it maintains under
authority of the government. PGMedia, which
sells domain names with novel endings such as
".firm" and ".store," argues that NSI and the
government lack the authority to dictate what
TLDs are made available on the global network.

PGMedia's request for an order declaring that
the U.S. government lacks the authority to
govern the Net--and requiring NSI to modify its
"root server" to recognize hundreds of new
TLDs--is now pending before a federal judge in

NSI now has sole authority to register domain
names ending in ".com," a coveted extension that
graces an estimated two-thirds of the nearly 5
million Internet addresses registered worldwide.
Last year alone, NSI netted more than $93
million in revenues, a 107 percent increase over
1997 revenues, and attributed the explosive
growth to the popularity of ".com" addresses.
PGMedia and other NSI critics complain that the
refusal by NSI and the government to create new
generic TLDs has only fueled NSI's
government-granted monopoly.

Since PGMedia filed its suit, however, the
Internet landscape has changed drastically,
throwing a monkey wrench into an
already-complicated lawsuit. Last fall, the
National Science Foundation passed
responsibility for the Internet to Commerce
Department, which in turn has laid out a plan to
turn administration to a private company and
open up registration competition. By March, five
companies are slated to offer wholesale
registration to addresses ending in ".com,"
".net," and ".org," and by June, the field is
slated to be opened to any accredited registrar.

When the move is complete, the nonprofit
Internet Corporation for Assigned Names and
Numbers will assume authority over the domain
name system, or DNS, which serves as the
plumbing for Internet addresses around the
world. The Commerce Department, in conjunction
with the Internet Assigned Numbers Authority,
currently governs the system.

Already arguing that PGMedia's suit is flawed on
constitutional grounds, the NSF and NSI say the
proposed changes are another reason why the
lawsuit ought to be thrown out of court.

"This lawsuit represents an effort by plaintiff
to derail that carefully developed process,"
attorneys for the NSF argued in a court brief
filed last year. "In essence, plaintiff demands
that the issue of new generic TLDs should be
decided not by the Internet community, but
rather by a court order requiring the addition
to the DNS of some 500 TLDs that plaintiff has
already sold to prospective registrants." The
NSF goes on to argue that the case should be
stayed until the plan has been implemented.

NSI, which is being represented by the same firm
representing Microsoft in the antitrust suit
against it by the Justice Department (DOJ) and
19 states, is also seizing on the Commerce
Department's plans.

"During the transition period, any policy
decisions about the addition of new TLDs to the
root zone file will be made by the Department of
Commerce--not NSI," the company argued in a
court brief filed last month. "In short, NSI
does what it is told to do by the Department of

Under established case law, NSI argued,
governmental agencies are immune from antitrust
laws, and so are private companies carrying out
programs under authority from the government.
Herndon, Virginia-based NSI points out that a
similar antitrust case filed against it in late
1997 was dismissed last year on the same
"federal instrumentality" grounds. In light of
the Commerce Department's directive for NSI to
turn over its database, "there is no longer any
question as to whether NSI has any discretion
concerning the addition of new TLDs," the
company claimed.

But PGMedia is not rolling over yet.

"The mere establishment of a nonprofit
corporation...neither ends the controversy
between PGMedia and defendants nor alleviates
the continuing, irreparable harm suffered by
PGMedia as a result of defendants' monopolistic
control over DNS and denial of PGMedia's access
to Internet top-level domains," PGMedia argued
in its own January court filing. "This court has
no assurance that ICANN will ever be in a
position to offer PGMedia the DNS access it has
fruitlessly sought since 1997."

PGMedia also rejects NSI's argument that it and
the NSF are immune from antitrust law, saying
that a company can be exempted from antitrust
law only when Congress explicitly authorizes
such immunity. Further, PGMedia argues, both the
U.S. government and NSI lack standing under
international law to restrict the expansion of
TLDs in other countries.

Evidence that there is strong demand for new
generic TLDs is growing, said Sascha Mornell,
director of marketing at, a retail
domain name registry. He said his company
registers 10 to 20 domain names per day ending
in ".md." Although the TLD formally recognizes
the country of Moldovia, many pharmaceutical
companies believe it may be a desirable piece of
real estate in the future. Similarly, broadcast
companies are showing interest in addresses
ending in ".tv," the TLD for Tuvalu, he said.

Still, with NSI controlling the plumbing of the
vast majority of the Internet, legal challenges
to its authority are likely to continue.
Analysts note that even after the Commerce
Department's privatization plans are completed
NSI is likely to wield immense control over the
DNS, since it will continue day-to-day upkeep of
the root server., a small
domain-name management service, says it will sue
NSI if it cuts off access to its root server as
NSI has promised.

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