ICANN, VeriSign Strike Domain Agreement

The Internet’s governing body has agreed to settle several outstanding lawsuits involving domain registrar VeriSign, an agreement that will keep that company in charge of the key dot-com domain until 2012.

The Internet Corporation for Assigned Names and Numbers (ICANN) said the settlement is still subject to a final vote of approval from its Board of Directors, but said once finalized, it will enable a better system to coordinate domain names to be put into place.

The Internet Community

“This proposed agreement settles many of the long-standing points of tension between ICANN and VeriSign,” said Paul Twomey, President and CEO of ICANN. “The settlement opens the way for a constructive and productive relationship that will benefit the global Internet community.”

Twomey said the settlement will also allow more ICANN staff and resources to be directed toward the operation of the agency.

The agreement also calls for the two sides to agree to enter into international arbitration should future legal disputes arise as well.

While important to both ICANN and VeriSign, the deal may only be a prelude to more sweeping decisions about the future of ICANN, which faces growing efforts to reduce its autonomy and turn control of the root server system over to the United Nations.

Making Nice

The deal puts VeriSign in charge of the two most popular top level domains for the next several years. VeriSign had previously been awarded the contract to operate “.net” until 2011, a deal that is widely seen as paving the way for the current settlement.

That contract was awarded amid sharp criticism of ICANN, which was accused by observers and even some insiders of following a process that heavily favored VeriSign over competitors vying for the same contract. ICANN attempted to assuage those critics by initiating a review of the process, but in the end decided VeriSign was best suited to run the registry, which can be worth hundreds of millions of dollars over the life of a contract.

“An agreement could not have been reached without both sides trying to find compromise and new solutions,” said Mark McLaughlin, Senior Vice President and General Manager of VeriSign’s Naming and Directory Services business unit. “VeriSign’s objective was to gain clarity and business certainty for Internet operators.”

The two sides began clashing when VeriSign introduced a controversial service that re-directed users who mistyped domain names to a VeriSign-controlled site. VeriSign eventually halted that service, known as SiteFinder, but sued ICANN, saying it was interfering too much in the day-to-day operation of the domain name system for which VeriSign is responsible.

In the agreement, VeriSign agreed to a new definition of what registry services entail, agreed not to make changes to its services without first notifying ICANN and agreed to a process that enables innovations in registry services to be reviewed for “competition, security and stability.”

What Next?

ICANN may also be winning a powerful ally as it tries to keep its autonomy going forward.

The stakes in the debate over ICANN’s future are high, analysts say.

A replacement system to ICANN, which was created by the U.S. Department of Commerce, which still keeps some control of it, would have to prove it could handle the massive responsibility of properly assigning and managing domains. Any sub-standard performance could lead to massive slowdowns in e-commerce and other economic engines on the Web.

“Everyone takes the system for granted, but that’s because it works almost all the time,” said Forrester Research analyst Charlene Li. “If there every came a day when Web users couldn’t find Google or Yahoo or Amazon or eBay, it would be disastrous.”

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