IP: Who owns the domain name space?

[David Farber <farber () central cis upenn edu>]

the long run.


5.  Q.  What exactly is a domain name?


A.      A domain name is a unique identifier which designates a specific
computer on the Internet.  Organizations choose a domain name and then
register that name with the registrar who enters the name into the global
domain name system.  Then any Internet user can use the domain name to
communicate with that organization over the Internet.


5.5 Q.  Since the Domain Name Service links the names with the numbers user
for routing, wouldn't it be simpler to base the fees on the numbers?


A.      Large blocks of numbers have been assigned to Internet service
providers and others for future use.  These numbers reflect potential for
future use but not actual current use.  It would be difficult to base an
equitable funding solution on numbers since the names more accurately
reflect actual Internet use.


6. Q.   What about the average Internet user?


A.      While it is difficult to describe the "typical" Internet user,
generally speaking, they fall into three categories: there are large
organizations and corporations, which have a single, or relatively few,
domain names.  For those users, the costs are insignificant.  There are
those who have Internet access through on-line services such as America
Online, Prodigy and Compuserve. These services each have a single domain
name for all the end users.  That means America Online will pay a single $50
fee annually, regardless of how many subscribers the service has.  The third
group are small businesses and individuals who have their own domain name.
The fee amounts to less than $5 per month which is less than the cost of a
single movie ticket.


7. Q.   What is Network Solutions and why does this company get to charge
for the Internet?


A.      Since March 1993, the National Science Foundation has funded the
administration of non-military Internet domain name registrations in the
U.S. through a cooperative agreement with Network Solutions.  This agreement
was awarded after a free and open competition conducted by the National
Science Foundation in 1992.  This agreement extends through 1998.  The
original solicitation and the cooperative agreement considered the ultimate
shift to user fees for Internet registration.  Obviously, the Internet is
evolving, and the next three years will give the NSF and the Internet
community the opportunity to consider financing alternatives.


7.5 Q.  When NSF originally competed for the services now provided by NSI,
the NSF was paying.....  The situation now has changed and there is a profit
to be made.  Why not re-open the competition?


A       The original competition solicitation that resulted in the Network
Solutions award considered that the move would be made to fee-for-service
and cost recovery from end-users.  Network Solutions won that award
competitively and has performed very well.  Since there has been no change
in the scope of the effort and the imposition of fee-for-service was
included in the original solicitation, no additional competition is
necessary.


7.6 Q.  Is there an NSF precedent for this?


A.      There is precedent for the dramatic growth seen under this award in
almost all of the awards associated with the (earlier) NSFNET.  There is no
precedent, however, for continued support by NSF for an activity now
primarily involving organizations and individuals outside the research and
education community.  This is why user fees became necessary.


8. Q.   How much profit is this going to generate beyond what's reinvested
in the Internet?  What's your margin?


A.      We don't know what our costs will be, since the growth in
registrations is so great, and this activity has never been privatized
before.  As a tax-paying, for-profit corporation, we certainly hope that we
have accurately estimated our cost of performance, and that the fees will be
sufficient to cover those costs and provide us with a reasonable profit.


9. Q    Exactly how will the fees be spent?  What's the formula?


A.      All fees received will be considered "program income" under he NSF
General Conditions of the cooperative agreement and must be shown as
revenues and their disposition accounted for.  Seventy percent of the fees
collected will be retained by Network Solutions to cover operating costs and
will be audited by NSF.  The remaining thirty percent will be spent, with
guidance from an advisory committee drawn from the Internet community, into
the intellectual infrastructure of the Internet and will be publicly
accounted for.


9.5 Q.  What is this "intellectual infrastructure?"


A.      Conceptually, it's the framework which allows the hardware (circuits
and routers) of the Internet to operate.  We haven't, as yet, identified all
the pieces.  Some of the more obvious ones include the IANA (Internet
Autonomous Numbering Authority, which oversees the name and numbering
schemes for the Internet); an RFC (Request for Comments, the communally
developed operational policy documents for the Internet) Secretariat and the
root domain servers.  These all need continued and enhanced financial
support as the federal agencies which have been providing their funding are
confronted with a new commercial Internet environment which continues to
require these functions.  Community input is being sought to help identify
other essential elements.


10. Q.  What kind of service improvements are you talking about?  How fast
will you be able to process domain names?


A.      Improvements will be based upon direction from an Internet user
advisory committee approved by the National Science Foundation.  For
example, Network Solutions may be asked to pay for or replace root domain
name servers which are now provided voluntarily by the research and
education community.


        With regard to improvements, our first priority is to speed up
domain name registration time from five weeks to two days.


11. Q.  How long will we have to wait for these improvements?  And when will
the domain name backlog be caught up?


((DAVE -- NEED TO ANSWER FIRST PART))  We hope the backlog will be
eliminated by the end of October.


12. Q. What about .edu, .gov and .mil?


Consistent with its charter to support the higher education community, NSF
will continue to pay the fees associated with registration in the education
(.edu) domain.  NSF will also pay, on an interim basis, the fees for the
government (.gov) until the federal agencies determine how the government
will pay for these domains in the future.  The education and government
domain names, however, represent only 2.5 percent of the total domain names.
 The military (.mil) registrants are supported by a separate registration
service for which the Department of Defense pays.


13. Q.  Will this affect foreign registries?  Are they already a revenue
stream?  If not, why not?


A.      The Internet is a global enterprise.  Most "foreign" organizations
are registered under their two-letter "country code" (e.g., .HK for Hong
Kong or ..FR for France).  Authority for registration under these domains
has been delegated to foreign registration authorities closer to their
respective areas.


14. Q.  How many domain names are there?  How many Internet users overall?


A.      There are more than 110,000 domain names in the five top level
domains (.com, .edu, .net, .org., .gov) administered by NSI.  It is
impossible to reliably estimate the total number of Internet users.  There
are over 84,500 registered networks, with more than 61,000 of these
connected to the Internet.  These 61,000 networks comprise about 6.5 million
computers, which may equal up to 30 million or more users.


15. Q.  What happens if someone' domain name registration lapses?  How
quickly can that domain name be reissued?  What happens if the original
registrant wants it back?  What if there are extenuating circumstances?
What happens if someone's check bounces?  What happens if somebody uses a
false or stolen credit card?  Will you issue refunds for any reason?


A       Each domain name registrant will receive three electronic notices
that their renewal is due on their anniversary date.  If no payment is
received by the anniversary date, the domain name will be removed from the
Internet immediately.  If no payment is received within 60 days, the name
becomes available on a first-come, first-served basis.  In cases where there
is a problem such as a bad check or credit card, the name will be removed
immediately and held for 60 days before being available for reassignment.
Refunds will not be available.


16.     Will NSI accept electronic payments?


A.      NSI cannot accept electronic payments initially because of security
concerns.  We are carefully considering it as one of the payment options,
and plan a phased introduction of electronic payments as part of the future
improvements.


17.     Does this mean you will have to keep track of paper mail addresses?


A.      Network Solutions can only provide electronic notices that the fee
is due.


18.     What happens after the agreement with NSF runs out?


A.      NSF is encouraging discussions within the Internet community to
answer this longer-term question.  We believe that organizations such as the
IAB and the ISOC and commercial providers as well as the more traditional
Internet research and education community must be involved in determining
the answer.


19.     Are any more fees anticipated?  Do we have any guarantees that you
won't keep hiking fees?  What guarantees are there that the money will
really go for Internet improvements?


A.      No, we believe that the $50 amount should be adequate to cover
reasonably foreseeable contingencies.  Any new fees or increase must be
approved by NSF. The priorities and funding for improvements will be
determined by an advisory committee, reviewed by the NSF, audited and
publicly accounted for.


20.     In terms of cutting registration time, does this simply mean hiring
a few more clerks?  How much can that cost?  Will your books be audited, and
will you disclose exactly what the revenues and expenses are?


A.      While Network Solutions will need additional staff to complete
registrations, we are also investing in automating the process.  The
National Science Foundation, while not providing the funding, will continue
to provide oversight.  NSF will approve an advisory committee from the
Internet community to review the fees and recommend appropriate
expenditures.


        All fees received will be considered program income under the NSF
General Conditions of the cooperative agreement and must be shown as
revenues and their disposition for related activities accounted for.
Seventy percent of the fees received will be retained by Network Solutions
as consideration for its services and will be audited by the NSF.  The
remaining 30 percent will be spent, under guidance from the advisory
committee, to support the intellectual structure of the Internet and will be
publicly accounted for.


21.     Don't you really want the money to build a legal defense fund?


A.      As we said before, the move to a "fee for service" arrangement has
been driven by the fiscal reality that the government can no longer
subsidize this service. Unfortunately, litigation costs are a reality of
doing business today.  As with any other prudent company, Network Solutions
has to factor reasonable legal expenses into its cost of doing business.


((DAVE: ADD RISK DISCUSSION WE SPOKE OF?))


22.     How did you come up with $50?


A.      We believe that the $50 fee is adequate to cover reasonably
foreseeable contingencies.


23. Q.  What if someone can't afford the fee?


A.      The fee amounts to less than $5 a month.  We think this is a fair
charge to cover the cost of domain name services and represents a trivial
cost compared to the access and equipment expenses associated with
maintaining an active Internet presence.


24. Q.  What other plans does NSI have to make money from its Internet
monopoly?  What other surprises are in store?


A.      Under the terms of our agreement, no changes of increases in fee can
be imposed without prior NSF approval.  We believe that the $50 fee is
adequate to cover any reasonably foreseeable contingencies.  For this
reason, based on present knowledge, we expect no additional fees.


25. Q.  Do you think this will slow down the rate of Internet domain name
requests?


A.      It's premature to speculate, but in talking with long-term Internet
users, we find strong support for the user-fee concept because it will pt
the Internet on a self-sustaining basis and fund improvements that tax
revenues could not support.  Gordon Cook, publisher of the Cook Report on
the Internet, recently stated that charging a small uniform fee should help
preserve the independence of the IETF (WHAT'S THIS?)


28. Q.  Won't providers just pass this cost along to the little guy who uses
the Internet?


A.      Considering that providers such as America Online, Prodigy,
Compuserve, MCI Sprint, Harvard, MIT, IBM, GE, etc. have a single domain
name for all end users, amortizing the $50 annual registration fee over the
number of end users should have a minuscule effect.