Firm Loosens Control of Internet; Network Solutions Agrees to Let Competitors Sell Addresses

Network Solutions Inc., the Herndon firm that assigns most ofthe world's Internet addresses, reached an agreement with theClinton administration yesterday to open parts of its business tocompetition while retaining exclusive control for two more yearsover other key management functions on the global computer network.

Analysts called the deal a significant victory for NetworkSolutions, whose future had been clouded by the government's desireto strip it of its monopoly. Since 1991, Network Solutions has beenthe only entity allowed by the government to register Internetaddresses -- called "domains" -- that end in ".com," ".org" and".net."

That contract has given tiny Network Solutions enormous cloutin the sprawling Internet. Internet activists have long argued thatthe arrangement was at odds with the network's freewheeling rootsand have appealed to the government to open the process tocompetition.Under the agreement, Network Solutions will let other firmssell addresses in the three domains by June 1999. The company,however, will continue to operate a database that contains assignedaddresses.Firms that want to sell an address will have to register itwith Network Solutions to prevent duplication. Network Solutions andthe government still must negotiate what the registration fee willbe, but the agreement reached yesterday calls for the price toreflect the costs of running the database and a "reasonable" profit.Network Solutions also will continue to run the centralelectronic "white pages" directory that enables computers to findone another on the Internet."We think this is a win-win relationship for the governmentand Network Solutions," said Gabriel A. Battista, Network Solutions'chief executive. The company's agreement with the government wouldexpire in September 2000.Although the administration is transferring its authority overthe Internet to a nonprofit corporation, Internet specialists expectthe new entity to honor large portions of the arrangement withNetwork Solutions.The Commerce Department has received three proposals tooperate the nonprofit corporation and officials intend to select oneof them in the next few weeks, said J. Beckwith Burr, the associateadministrator of the department's National Telecommunications andInformation Administration.Many observers predict that the new entity will create newdomains, such as ".store" or ".arts." Databases for those domainswould not have to be operated by Network Solutions.Nevertheless, industry analysts believe that the .com domain,which has become an address suffix for most of the world'sbusinesses, will continue to remain the most popular. And, they say,Network Solutions probably will be the biggest address seller in thecompetitive market.Some Internet activists have urged Network Solutions to open itsbusiness to competition immediately.But Battista said his firm needs the time to create a computersystem that can handle multiple firms assigning addresses. "We needto make sure that it won't disrupt traffic on the Internet," hesaid.Network Solution's stock rose 75 cents yesterday, to close at$36.25 in Nasdaq Stock Market trading.