House Holds Hearing on Domain Names

(April 1, 1998)  Two House Subcommittees held a joint hearing on privatization of the Domain Name System yesterday.  Administration representative Ira Magaziner defended the Commerce Department's so called "Green Paper", while Jim Courter of the Internet Council of Registrars (CORE) harshly criticized the "Green Paper" and promoted CORE's competing proposal.

The event was a joint hearing of the Subcommittees on Basic Research and Technology, of the House Science Committee.  The hearing date coincided with the expiration date of Network Solutions, Inc.'s, (NSI) contract with the National Science Foundation to provide domain name system services.  The hearing was chaired by first term Rep. Charles "Chip" Pickering (R-MS).

While many other Representatives participated in all or a part of this very technical hearing, Pickering was the only one up to speed on the domain name system.  Another Congressman suggested that he did not want to delve into the issue - he just wanted "to hover above it."

Presently , many functions of the domain name system are run by NSI under contract from the National Science Foundation.  The contract expired yesterday, but NSI's present functions will probably continue through September.   There is little dispute that much of the government's control over the domain name system (DNS) should be privatized.  However, there is considerable dispute over the details.  The two major proposals are the Administration's "Green Paper", which was released on February 20, 1998, and the CORE proposal.

At this hearing several other aspects of the domain name system were described as less controversial.  These included:

• The assignment of Internet Protocol (IP) numbers.
• The operation of the root server system.
• The assignment and registration of the technical parameters and protocols used on the Internet.

The main area of dispute between the two proposals is how registries will be handled.   A House Science Committee Charter written for the hearing summarized this difference as follows:

To understand the differences between the two proposals on registries, it should be kept in mind that the Internet’s Domain Name System is hierarchical. At the base are registrars—for-profit companies which register domain names for clients. Above the registrars are the actual registries, such as .com, .edu, and all the national domain names.  These registries are the actual files of domain names. Presently NSI is a registrar of domain names and also controls the registries of .com, .edu and .org. Right now, anyone who wants a .com, .edu or .org domain name must go through NSI.

One of the major differences between the two plans is who or what organization will control the registries once the DNS is transferred to the private sector. The Administration’s Green Paper would allow several separate for-profit companies to control an individual registry in the same way that NSI controls .com, .edu, and .org today. Under the Green Paper proposal, NSI and several other companies would have natural monopolies over their registries and would compete amongst themselves for customers. The customers would be the various registering companies. As a precaution against favoritism, the companies managing the registries would have to create a fire-wall between their registry functions and their registrar functions.  The CORE proposal, however, would establish one non-profit shared registry containing all the individual registries.

Under their proposal, NSI would lose the .com, .edu and .org registries (these registries would become part of the non-profit shared-registry) and NSI would compete, as a registrar, for business against all the other registrars (approx. 100) without the benefit of controlling a registry. The CORE group argues that registries are largely administrative, back-office operations that offer little in added-value for customers, and therefore there is no need for competition at the registry level. The Green Paper argues that only through the profit-motive and competition among various for-profit companies will the money be generated to maintain the registries that will allow the Internet to succeed.

The Administration acknowledges that under its registry-scheme, "switching costs and lock-in issues" could arise in instances in which users wish to change from one registry company to another. Once it becomes widely known, for example, that a certain business can be found under the .store Domain Name, the operator of that register could increase the price charged to the locked-in company. Moreover, the cost of switching to a different company may lead to a situation in which it is difficult to move from one registry to another.

Jim Courter, the CORE representative, attacked the "Green Paper" on many grounds, including:

"The Magaziner Plan perpetuates and consolidates the Network Solutions Monopoly; It creates new, unregulated monopolies for single Top Level Domains (TLDs), with the potential for price-fixing and gouging, rather than creating not-for-profit registries to operate in the public trust with multiple TLDs; It manipulates the market by attempting to control the number and rate of introduction of new Top Level domains."

He also proclaimed that "CORE supports open competition in the DNS system. The Magaziner Plan does not."

The Committees also heard testimony from:

• Robert Kahn, President and CEO, Corporation for National Research Priorities.  (Prepared statement.)
• Barbara Dooley, Executive Director of the Commercial Internet Exchange Association (CIX).  (Prepared statement.)
• David Farber, Professor of Telecommunications Systems, University of Pennsylvania.   (Prepared statement.)