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Clinton plans 'Net overhaul
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January 30, 1998: 7:17 p.m. ET
Administration proposes minimal government role, more competition
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NEW YORK (CNNfn) - The Clinton administration on Friday announced long-awaited proposals to increase the private sector's role in establishing names and addresses on the Internet and to increase competition.
"The U.S. government should end its role in the Internet number and name address systems in a responsible manner. This means, above all else, ensuring the stability of the Internet," the Commerce Department's National Telecommunications & Information Administration division wrote in a 16-page report.
The government action comes after a White House memorandum of July 1, 1997, calling for an increased role by the private sector.
Under the new proposals, the government will split the functions of managing domain names (www.cnnfn.com, for example) and the numerical routing numbers that underly them. The plan projects to phase out government involvement "in no event later" than Sept. 30, 2000.
The administration proposes, among other steps, to establish a non-profit corporation to coordinate routing numbers -- a role currently assumed by the Information Sciences Institute at the University of Southern California. The new corporation would report to a board of directors consisting of executives in the private sector.
The Clinton administration also proposed to increase competition in the area of name registration - a function currently conducted by Herndon, Va.-based Network Solutions Inc., a publicly traded company.
News of the administration's plans hurt Network's Solutions' stock (NSOL), which closed down 1-7/8 at 18-3/4 Friday amid concern about increased competition. Network Solutions has the exclusive contract to register Web domain names using the ".com," ".net" and ".org" suffixes. Its contract expires at the end of March, but is expected to be extended until Sept. 30.
At least one analyst believes investors may be jumping the gun. "I don't see there being a relevant competitor for at least a year," said James Pettit, an analyst at Hambrecht & Quist. Pettit estimates that Network Solutions registered 260,000 names during the fourth quarter. The company says it registered a total of 960,000 names in 1997.
In a prepared statement, Network Solutions said it supports the administration's plans.
"We believe the Department of Commerce's approach establishes a broad policy framework for future governance, and we look forward to working with them on the details of the plan," said Gabe Battista, chief executive of Network Solutions.
In addition, the administration proposed the creation of new top-level domain names to further increase competition among registries. While the report made no specific suggestions, some examples given in the past were names such as ".store" for commercial operations.
However, in order to avoid chaos, the report recommended the creation of such names be accomplished "at a deliberate and controlled pace."
-- by staff writer Robert Liu
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