<nettime> Internet-Address Assigner in Va. Is Focus of Justice Department Antitrust Probe

[Paul DeRienzo <pdr@echonyc.com> (by way of mf@mediafilter.org (MediaFilter))]

Internet-Address Assigner in Va. Is Focus of
Justice Department Antitrust Probe


By Rajiv Chandrasekaran
Washington Post Staff Writer

Sunday, July  6, 1997; Page A13
 The Washington Post


The Justice Department has begun investigating
whether the process of assigning Internet
addresses in the United States, a process almost
entirely controlled by Herndon-based Network
Solutions Inc., violates antitrust laws.<p>
Network Solutions said it received a request for
documents and information relating to its
Internet address registration business from the
Justice Department's antitrust division on June
27, according to a document the company filed
last week with the Securities and Exchange
Commission. The Justice Department also is
seeking information from Science Applications
International Corp., Network Solutions' parent
company, the document said.     Network
Solutions is the only company in the world
authorized to assign some of the Internet's most
widely used "domains," or addresses,
specifically those that end in ".com," ".edu,"
".net" and ".org." Critics have complained that
Network Solutions, which charges $100 to assign
a domain, has an unfair monopoly that has led to
a high registration price and poor service.<p>
The Justice Department's request is a standard
preliminary step in antitrust investigations.
But the government has rarely looked into the
governing processes of the Internet, the global
computer network that has become a vital
communication medium for millions of businesses
and individuals worldwide.<p>
Registering a domain is a necessary step for any
person or business that wants a unique address,
such as disney.com or cocacola.com. The
registered domains serve as a sort of Zip code
for the Internet, allowing users to send
electronic mail and locate pages on the
graphical World Wide Web.  <p>
Gabriel A. Battista, Network Solutions' chief
executive, said yesterday the company intends to
fulfill the request. "We've received the
notification and we will comply with whatever
they ask for," Battista said.<p>
Battista declined to comment further, citing the
"quiet period" the SEC requires of executives
when their company's stock is being offered to
the public for the first time. Network Solutions
on Thursday notified the SEC, in the same
document that disclosed the antitrust
investigation, that it is planning a stock
offering worth as much as $35 million.<p>
In the document, Network Solutions said it
"cannot predict whether a civil action will
ultimately be filed by the [Justice Department]
or by private litigants as a result of the
[Justice Department] investigation or, if filed,
what such action would entail." The document
also states that "neither SAIC nor [Network
Solutions] is aware of the scope or nature of
the investigation."<p>
A Justice Department spokeswoman, Gina Talamona,
would not comment yesterday on the
investigation.<p>
In March, Network Solutions was sued by a New
York company, PG Media Inc., which alleged that
Network Solutions is violating antitrust laws by
not adding new domain suffixes.<p>
Network Solutions was given the power to assign
domains on the Internet in 1995 by the National
Science Foundation, which previously had
controlled registration when the network was
largely the territory of academics and
government scientists. Under the deal, the
company would place 30 percent of the
registration fees -- or $30 per domain -- into a
fund for the "preservation and enhancement" of
the Internet.<p>
None of that money has been spent, and the fund
totaled $23.8 million at the end of March,
according to the document filed with the SEC.
Network Solutions' revenue from registration
activities since its inception has been more
than $55 million.<p>
The NSF said in April that it would not renew
Network Solutions' deal when it expires next
year, but the company said it does not plan to
relinquish its exclusive hold on the domains it
registers.<p>
The document filed with the SEC also reveals
that Network Solutions, which has kept its
financial position confidential, has returned to
profitability, posting earnings of $516,000 in
the quarter ending March 31. Last year the
company lost $1.6 million and in 1995 it lost
$2.8 million.<p>
The company blamed its inability to expand its
billing and management systems to keep up with
the Internet's surging growth as the reason it
was not able to profit from the business in
those years. Network Solutions said in the
document that it has installed new computer
systems to handle the demand and expects to stay
current in billing users for domain
registrations.<p>


Copyright 1997 The Washington Post Company


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