Network Solutions Girds For Loss Of Monopoly

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August 06, 1998 (5:02 PM EDT)

Network Solutions Girds For Loss Of Monopoly

By John Borland,

While the Internet domain-name system stumbles toward competition, the company that has held a monopoly for the past five years has been quietly extending its reach in preparation.

For two more months, Herndon, Va.-based Network Solutions Inc. (NSI) will be the sole company in the world with the direct power to register addresses using .com, .net, or .org domain names. They've parlayed this five-year government-granted monopoly into profits, posting nearly $2.5 million in net income last quarter alone.

But this government contract will end in October, as part of the U.S. government's move to turn management of the Web's address system over to the private sector. For the past few months the company has been striking deals with overseas ISPs, telephone companies, and domain registrars in an effort to make its as ubiquitous as possible before competitors enter the market in earnest.

"We want to be the first in any geography where we can be the first," said Doug Wolford, NSI's senior vice president of marketing.

Wednesday's agreement with China's top registrar, the Computer Network Information Center, serves as the best example yet of NSI's ambitious expansion policy. The Chinese firm contracts with its government to register any Web address using the .cn extension. NSI's deal will give it exclusive rights to market the .com, .net, and .org domains through the Chinese company, and to sign up .cn addresses outside China.

The company also has signed marketing and operational agreements with several major Asian telephone networks, and a list of leading ISPs in Sweden and Canada. In April, NSI purchased idNames, a Texas registrar specializing in country domain addresses such as Britain's .uk or Japan's .jp, as a first direct step into this international market.

About 70 percent of today's registrations still come from the United States, Wolford said. "But we are seeing a tremendous acceleration in the growth curve around the globe," he added. NSI wants to be there for that market, forging partnerships with the most "trusted, reliable," players in each market, he said.

NSI's current monopoly on .com and its other addresses does not extend into the country-based domains. Other companies, such as New York's NetNames, have turned a focus on worldwide customers into their own lucrative share of the Web address market, and could theoretically be pursuing the same partnerships.

But NSI's established infrastructure and residual monopoly power still makes it the most attractive registrar partner for overseas firms.

"NSI has not only had a five-year head start, they've been able to build an impressive infrastructure during the course of their monopoly franchise," said Ellen Rony, a California Web consultant and author of the recently released Domain Name Handbook.

Rony compares NSI's post-monopoly position with AT&T after the telephone system's breakup. "Obviously their market share is going to drop with competition," she said. "But no one is ever going to have as many .com registrations as they will."

Meanwhile, potential competitors that want to offer new kinds of domain names are chafing at delays. A process to set up a non-profit corporation governing Web addresses is under way, but new top-level domains will likely stay on the drawing board until at least next summer, say those involved.

"I don't fault Network Solutions for doing everything they can to expand their business," said Jay Fenello, president of Iperdome, a registrar that wants to offer names with a .per address extension. "I'm just frustrated that I'm still prevented from doing it myself."