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Robbie Stephens Conference: Bring on the Competition, Network Solutions Says

The Internet domain-name administrator prepares to expand beyond its bailiwick.


Network Solutions


continue to prosper even as competitors prepare to enter its lucrative Internet registration business? The nearly unanimous answer seems to be yes.

Before executives began addressing Network Solutions' packed presentation Wednesday at the

BancBoston Robertson Stephens Tech '99 Conference

, Robbie analyst Keith Benjamin tried to "clear up the confusion" about Network Solutions' business by saying that "there's no competition coming."

Benjamin spoke of the

Internet Corporation for Assigned Names and Numbers

, or Icann, a not-for-profit entity authorized by the U.S. government to oversee the evolution of the Internet domain name system. The five companies that Icann selects to compete with Network Solutions will effectively end the company's monopoly on domain-name registration. But the process of bringing new competitors has taken so long that Network Solutions has been able to fortify its dominance.

When Network Solutions CFO Bob Korzeniewski took the podium, he boasted that Network Solutions has the "best business model on the Internet." But he didn't mention the I-word. After dragging its feet for months, Icann looks like it's finally getting its act together. The company Feb. 8 released guidelines for companies hoping to compete with Network Solutions that are expected to be approved by Icann's board in early March.

By the end of April, Icann plans to introduce five competitors into the domain name registration business as part of a two-month test phase. After that, Network Solutions will be required to provide equal access to the shared registration system for all accredited registrars. And though Icann says it will let an unlimited number of companies participate in the registry, Network Solutions is guaranteed a seat at the table because it will still control the master root registry of all Internet domains.

Analysts don't expect the competition to put a big dent in Network Solutions' business, largely because the company has had a good, long time to anticipate competitors. "The momentum of the business has never been better," said James J. Pettit, an analyst with Hambrecht & Quist, which co-led Network Solutions' IPO. "We believe they are strongly positioned to be the dominant player in a huge and growing market." Pettit said H&Q has a 12-month price target of 250 on the stock, which closed Wednesday at 163 3/4.

Despite the end of its government-sanctioned monopoly, Network Solutions executives say the company's seven years of experience, its marketing deals with






, and its partnerships with more than 150 Internet service providers and 85 international partners put the company in a good position to maintain its market dominance.

"It sounds unstoppable to me," said Victor W. Long, an investor with

V/L Holdings

, after the presentation. "The first one to the mother lode wins the game."

Moreover, Icann has often been its own worst enemy. The group has been roundly criticized for its lack of openness and public accountability. One often-heard complaint is that the late Jon Postel, an Internet pioneer who helped draft the Icann plan, selected the board's members privately. And just a few days ago, one woman, Ellen Rony, announced plans to stage a protest at the board's upcoming Singapore meeting with gray ribbons. So far, 20 groups and individuals have joined Rony's Web campaign, including Net luminary Dave Farber,

Computer Professional for Social Responsibility

and the

Domain Names Services Organization


All this hullabaloo over Icann hasn't seemed to faze Network Solutions executives. "We're probably going to hear a lot about it during the breakout," Korzeniewski said. After which his colleague added for emphasis: "Competition makes us stronger. It's a good thing."

Meanwhile, Network Solutions plans to leverage its relationship with existing registrants to move into new services, such as a premium registration service for an extra $49, branded email accounts for $4.95 per month, country-level registration services that cost in the low to mid five-figures, and a .com directory that company officials say they plan to sell advertising and classifieds on.

"We branded ourselves in 1998 as the .com people," said Korzeniewski. "But in the past year we've become much more than a one-product company. In 1999 we have plans to expand on that aggressively."