The European Commission will shortly send a letter to the U.S. government withdrawing its concerns that Network Solutions Inc. (NSI) is abusing its dominant position in the market for registration of domain names.

EU to end NSI investigation
by Elizabeth de Bony, IDG News Service\Brussels Bureau
December 22, 1999

The European Commission will shortly send a letter to the U.S. government withdrawing its concerns that Network Solutions Inc. (NSI) is abusing its dominant position in the market for registration of domain names, a spokesman for the European Commission said today.

The letter signed by both Competition Commissioner Mario Monti and Information Technology and Enterprise Commissioner Erkki Liikanen will say "the new arrangements represent a step forward for transparency and free competition as regards Internet governance, but that the Commission will remain attentive to the effective implementation of the new system," the spokesman said.

The Commission decision follows talks with U.S. authorities in early November that apparently allayed EU concerns about NSI's new licensing arrangements.

The EU investigation launched in July sought to determine whether NSI's so-called Standard Registrar Licensing Agreements with other companies wanting to enter the lucrative market for the registration of domain names was overly restrictive and prevented competitors from entering the market.

Although the new Internet governance system set up last year would allow competitors to register domain names, the Commission had been concerned that NSI might be monopolizing a master list of names and Web addresses that it compiled during its years as sole registrar.

Last year the global Internet community, both private and public sector, agreed to a new Internet governance regime to promote competition in the domain-name registration market. The agreement put an end to NSI's monopoly.

The result was the creation of the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit agency to take over the governance of the Internet -- including issues related to the organization and management of the Internet numbering system (IP addresses), the Domain Name System (DNS) and the Internet protocols (technical standards).

Despite the ending of the EU anti-trust investigation into arrangements, the Commission remains uncomfortable with the fact that the U.S. government maintains its powers of oversight over the entire Internet governance system, another source who asked not to be identified said.

For this reason the U.S. and the EU have agreed to hold regular bilateral consultations and even emergency meetings, if problems arise.

Although the Commission acknowledges the need for oversight, it asserts that this should be exercised fully by a multinational body. Although ICANN's Board of Directors is composed of 20 people from varying nationalities and is authorized to make decisions, the official pointed out that its decisions "have to be effectively subject to approval by the U.S. Department of Commerce."

He explained that the U.S. justifies this situation by stressing that it will not give up its powers until it believes that ICANN has developed the authority to effectively regulate NSI and until NSI has unbundled its registry operations into a separate company.

The official said that the Commission is sympathetic with the U.S. government's plans to maintain its authority, but only until the end of 2000. At that time and in the long-run a more multilateral oversight structure will have to be put in place-possibly, the Commission suggests, by expanding the existing Government Advisory Council to ICANN in which the Commission and some thirty other governments and international organizations sit.

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