ICANN accepts bids to operate .net registry

The contest to operate the Internet's .net domain has begun, with four leading domain name service providers submitting bids to the Internet Corporation for Assigned Names and Numbers by the midnight Tuesday deadline.

Incumbent VeriSign is pitted against three main competitors: Afilias, which operates the .info and .org domains; DENIC, which operates the German .de domain; and NeuLevel, which operates the .biz and .us domains. All four companies confirmed that they have submitted bids for the .net registry.

ICANN says it will select a winner by March, with the transition of the .net domain - if there is one - to be completed by June 30, when VeriSign's contract expires.

Although less popular than .com, the .net domain is considered a critical component of the Internet's infrastructure. Five million .net names have been registered, compared to 30 million .com names.

Many network engineers rely on servers with .net names to keep their higher-profile Web operations up and running. For example, ISPs such as Earthlink and Comcast run their e-mail operations on the .net domain. VeriSign estimates that 155 billion e-mail messages are sent each day either directly or indirectly via .net.

Among the e-commerce sites that have DNS servers running on .net are Amazon.com, Microsoft.com and Walmart.com. Government agencies, including the Federal Emergency Management Agency and the National Security Agency, depend on .net servers to support .gov Web sites.

"The federal government is interested in what happens to .net," says Tom Galvin, vice president of government relations for VeriSign. "For whitehouse.gov, all four name servers are on .net."

VeriSign, which operates both the .net and .com registries, says .net is the largest top-level domain when ranked by number of hosts connected to the Internet. The .net domain represents 58 percent of worldwide hosts and 30 percent of the world's name servers, according to VeriSign.

"The most important thing for all .net users is stability and security," says Richard Tindal, vice president of registry services for NeuLevel. "That's the primary focus of our proposal."

The .net registry operates the highly available and redundant servers around the globe that handle billions of .net queries per day. The .net registry also supports a massive database that includes information about each .net name and handles additions, deletions and changes to that information.

The .net registry business brings about US$26 million a year to VeriSign, according to analysis by Legg Mason. The new .net contract will last for six years.

VeriSign is emphasizing performance in its bid, committing to higher SLAs than are in the current contract. VeriSign says it has a record of providing 100 percent availability of .net resolution services.

VeriSign also stresses that it owns and operates a global infrastructure to support .net, and that it has invested more than $150 million in recent years to upgrade that infrastructure so it can handle more than 4 billion .net queries each day.

"We're continuing our commitment in the bid itself to expand the accessibility of .net," says Mark McLaughlin, senior vice president and general manager of VeriSign's Naming and Directory Services. "Last year, we added resolution sites in Korea and China. We're committing to add more sites in those countries and to add one in Brazil."

Afilias is touting its successful transition of the .org registry in 2003, when it took over back-end operations from VeriSign. Afilias also pioneered the use of a new, more secure protocol for DNS registry and registrar communications that is called Extensible Provisioning Protocol (EPP).

"We're the only ones that have any migration experience that is on the scale of what .net is going to represent," says Roland LaPlante, chief marketing officer for Afilias. "We know from experience that [migrating to EPP] is not an easy task. That's something that VeriSign hasn't done."

DENIC is emphasizing its non-profit status as an advantage in the operation of the infrastructure-oriented .net domain. During the 10 years that DENIC has been operating .de registry, it has grown into the world's second largest domain with more than 8 million names registered.

"What's most important about us is that we are non-profit and we are very technical," says Sabine Dolderer, director of DENIC. "We will not compete with registrars. As a non-profit, we are very dedicated to implement services demanded by the user community. We are very focused on the core needs of the infrastructure."

NeuLevel's bid focuses on new technology and services, including support for IPv6, the next generation of the Internet's main protocol, as well as support for internationalized domain names. NeuLevel has teamed with Japan Registry Services, which operates Japan's .jp domain, on its .net bid. The two companies have formed a joint venture called Sentan Registry Services.

"We see the .net space as being a global space," Tindal says. "More than 40 percent of current .net users are outside the U.S., and among host machines connected to the Internet that use .net addresses, 21 percent are based in Japan."

It's unclear whether prices for .net names will go down as a result of the .net procurement. Today, .net names wholesale for $6 per year, but they retail for around $35 per year for a one-year registration and $15 per year for a 10-year registration. The issue of pricing is important to enterprise customers that own and manage large portfolios of domain names.

Afilias says it will sell .net names to registrars for $4 per year. "We estimate that will save the market $60 million over the course of the .net contract," says Heather Carle, director of communications for Afilias.

Two other issues may play a role in the award of the .net contract: VeriSign's history of contentious relations with ICANN, and ICANN's desire for a more competitive domain name industry. ICANN observers predict the two parties will end up in court if VeriSign isn't selected.

"It wasn't very clear in the bid on how ICANN is going to weight criteria such as stability," McLaughlin says. "How are they going to compare our track record against other bidders' claims?"

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