Happy Ending to Domain Name Saga?

After years of scarcity and outright speculating, we now have an open market for domain names—and at least one solution that cuts ISPs in on the deal.

by Ross Rader eCommerce manager, TUCOWS.com [November 5, 1999]

Domain names are a funny thing. For the longest time, they were simply human-readable identifiers that let users access the resources of a box on the network without having to remember the counterpart IP address. Then the network turned into the World-Wide Web, and things haven't been quite the same since. With the popularization of the Web came the "dot-com" boom, turning domain names into the hottest pieces of commercial real estate around.

Back when domain names were still free, the U.S. Department of Commerce and the National Science Foundation granted to a small consulting company— Network Solutions Inc. (NSI)—the rights to administer the "InterNIC." This is the simple beginning of a story that along the way spawned considerable confusion—and a lot of profiteering—in and around the domain name allocation space. This in turn led to the recent formation of the Internet Corporation for Assigned Names and Numbers (ICANN).

Brand bonanza
As the Web's popularity began to grow, domain names rapidly gained importance because they served as memorable resource locators for Web-based content. The Internet IPO feeding frenzy touched off by Netscape in 1995 served to further fuel the demand for domain names, as marketing folk quickly realized that they were a quick and easy way to brand the new breed of virtual companies. Domain name "speculators" noticed this as well and quickly started scooping up the most memorable names. Thus, the cybersquatters entered the picture.

As the Internet grew, the issue of domain-name scarcity escalated rapidly. With this scarcity, people began to realize that throughout all of this, one firm—Network Solutions—had an unsettling amount of control over the way domain names were issued, used, abused, bought and sold. Policies that Network Solutions had put in place in the early 90s in all innocence were often working against the best interests of the Internet public. Indeed, Internet history is littered with examples of companies using the policies of NSI and the often inappropriate application of trademark law against "the little guy" to stamp out the use of domains in which they had a vested interest. Pokey.org, MTV.com, and many more come to mind.

Anti-trust action?
The issues were very quickly becoming extremely complex—even as the Internet was becoming increasingly global. The U.S. Government began to realize that it had very little power to define what form Internet governance should take—and little motivation to allow the continuance of the Network Solutions monopoly. Through a lengthy process set in motion in late 1996, ICANN was created. Its mandate was to create structures that would facilitate Internet governance and policy development on a global basis. As well, it was tasked with breaking up Network Solutions monopoly and creating an environment that would foster competition in the domain name sales sector.

Early this year, ICANN announced that it would begin to accept applications from companies that were interested in acting as domain name registrars, a new category of firms that would be authorized to sell domain names to the public, as NSI had for years. Initially, only five firms were included, but during the course of the summer, over 60 firms were accepted to act in this capacity.

New competition in this space has led to the adoption of a variety of new business models by the various domain registrars. Most have focused on providing domain name services to end-customers using a variety of retail models. A few, however, have created resale programs that finally allow ISPs to get their fair share of the action. ISPs have always been the source of the vast majority of domain name registrations—customers almost always go to their provider for this service. These new reseller programs finally ensure that ISPs get their fair dues instead of just lining NSI's pockets.

Wholesale solution
One of the more intriguing of these new programs was launched last Tuesday (10/27/99) by TUCOWS.com. (Although it's best known for its network of software download sites and its recently launched music archive, TUCOWS has also been running a successful domain registration business for a couple of years now.) Their new program, dubbed OpenSRS (Open Shared Registration System) is based on a wholesale model. ISPs that sign up are provided with open-source client software that allows the ISP to register .com, .net and .org domain names for just $13 per year per registration.

One of the more interesting aspects of the TUCOWS model is that the company avoids all contact with the ISP's customers. In effect, OpenSRS acts as a supplier to ISPs and Web hosting companies. In typical supplier fashion, it does everything possible to ensure that the ISP maintains the relationship with the end-user customer. Above all, the ISP gets to set the business terms by which customers buy domain names from them; OpenSRS is purely transparent.

More information on OpenSRS can be found at the OpenSRS Web site.

For those interested in learning more about the current state of affairs in the domain name space, Ross Rader of TUCOWS will be moderating a panel discussion on the topic at the upcoming ISPF in New Orleans (Nov. 15-17). Scheduled panelists include Ken Stubbs, chairman of the Internet Council of Registrars (CORE), Marilyn Cade of AT&T, and Mike Palage an intellectual property lawyer at Infonetworks—plus a few surprise guests.

—End

Read another report on OpenSRS