Antitrust Suit Could Shake Up Net Governance

The suit, filed Thursday in Manhattan federal court, alleges that Herndon, Va.-based Network Solutions Inc. is running an illegal monopoly by blocking competitors from the domain name registration market. If successful, some attorneys say, the suit could dilute the power of the informal group of committees that in effect run the Internet.

NSI is the only defendant named in the suit. But a number of "stakeholders" -- or organizations that have been influential in creating the current domain name system -- were also named in court papers as nonparty co-conspirators. They include the Internet Society, the Internet Assigned Numbers Authority and the Internet Ad Hoc Committee.

The suit was filed by PGP Media Inc., an Internet service that wants to compete with NSI.

"NSI has joined with the stakeholders in the domain name registry market in an effort to retain NSI's monopoly as to registration of domain names," PGP's complaint charges.

NSI general counsel Phillip Sbarbaro declined to comment on the suit.

But Dave Crocker of the Internet Ad Hoc Committee dismissed the suit's allegations as false. Crocker suggested that the Internet protocols are adopted only after they are supported by the vast majority of the Internet community. "The IAHC has no authority unto itself and has never claimed any," he said.

Both his group and the Internet Society -- the Internet trade group which created the IAHC in order to devise a solution to the increasingly volatile issue of domain name allocation -- are sanctioned by "rough consensus," he said.

He added that the process has always produced "an occasional sour note. In this case greed is causing the sour note to be sounded in a legal context. [Rough consensus] needs to be adjusted over time, as it has been."

But others said Thursday's suit and another filed against the Internet Assigned Numbers Authority in San Luis Obispo County Superior Court in late February call into question whether such a scheme is a viable means of resolving debates as the Internet becomes increasingly commercialized.

"Rough consensus obviously doesn't work anymore," said Daniel Appelman, a Palo Alto partner at Heller Ehrman White & McAuliffe. "There are more players in the game and the vested interests are more concentrated and the stakes are much higher."

INFLEXIBILITY A PROBLEM
A domain name signifies a category of address on the Internet. The Net's official address protocol, known as the domain name system, does not officially exclude competition with NSI.

There are dozens of officially sanctioned registries around the globe, but the top-level domains, or TLDs, that they offer -- such as ".uk" and ".au" -- are not nearly as popular as NSI's coveted ".com" domain.

In addition, a number of companies have sprung up with their own user-friendly TLDs such as ".web" or ".camera" in an attempt to compete with NSI.

Nevertheless, the domain name system, an artifact from the days when the U.S. Department of Defense ran the global network, is not flexible enough to accommodate an unlimited number of TLDs.

So far NSI and others who run the central directory of TLDs have refused to recognize sites issued by alternate registrars, such as PGP. (PGP is not affiliated with Redwood Shores-based encryption software maker Pretty Good Privacy Inc.)

"By its control of this essential facility," the suit asserts, "NSI has the power to eliminate competition in the domain name registration market which is 'downstream' from the configuration file."

The so-called essential facilities doctrine at the heart of PGP Media Inc v. Network Solutions Inc., 97-1946, has been used effectively in landmark antitrust suits.

In 1983, MCI Communications Corp. won the right to access AT&T Corp.'s network under the doctrine in MCI Communications Corp. v. AT&T, 708 F.2d 1081. MCI successfully argued that since AT&T's infrastructure couldn't be duplicated by competitors, access was essential to opening up competition in the long-distance market.

According to Richard Gray, a partner at San Jose's Bergeson, Eliopoulos, Grady & Gray, in order to win its suit PGP "must establish that Network Solutions Inc., without any regulatory or technical justification, is withholding access to facilities which [affect] the plaintiff's ability to compete." PGP, he added, must demonstrate that NSI is a monopolist "just as AT&T was a monopolist, controlling critical facilities that prevented competition in the long-distance market."

MORE GOVERNMENT NEEDED?
While it's too early to tell, PGP Media could potentially erode the influence of the Internet Assigned Numbers Authority, which, under contract from the Department of Defense, created and maintains the underpinnings of the Internet's domain name system.

"It's clear that the Internet needs governance, and yet there doesn't seem to be any effective entity to undertake that responsibility right now," said Appelman, the Heller Ehrman partner. "Either the government will have to take a much stronger role or a way will have to be found to completely privatize [the Internet]. I think IANA and the Internet Society will play a decreasing role in this whole scene and that the bigger players in the private enterprise will begin to exert more and more influence."

Anthony Rutkowski, co-founder of the Internet Society and a former executive with the International Telecommunication Union, said the growth in the Internet means that significant structural changes will have to be made in the way the Internet is governed before there is stability.