Supreme Court Upholds Network Solutions’ Domain Fees

The U.S. Supreme Court has declined to overturn a U.S. Court of Appeals’ dismissal of a lawsuit against dominant domain registrar Network Solutions, Inc., thereby validating the company’s domain registration fee structure.

The high court issued no comment or dissent in rejecting the appeal by a group of nine companies and individuals that sued Network Solutions and the National Science Foundation (NSF) for imposing and collecting what they considered to be an unconstitutional tax.

The NSF first established a cooperative agreement with NSI in 1993, when it reimbursed the company for the cost of Internet domain registration. In 1995, the agency opted to allow NSI to start charging users $100 (US$) for a two-year registration, with $30 of that figure going into a government fund.

The government later stopped collecting the fee, and NSI set $70 as the going rate for an initial registration. Congress later voted to allow the fees.

Tuesday’s ruling also let stand a decision by a judge in the U.S. District Court for the District of Columbia that NSI did not violate the federal antitrust laws. The judge dismissed the class-action lawsuit against NSI and the NSF back in April 1998. The suit alleged that the NSF had, by virtue of its agreement with NSI, created a monopoly.

Long-Running Saga

NSI has been a consistent lighting rod for criticism over the control of Internet domain registration. The Herndon, Virginia-based company has taken public relations hits over its contentious feud with The Internet Corporation for Assigned Names and Numbers (ICANN), a board appointed by Congress to oversee the domain name industry.

The two parties reached a compromise, however, with NSI accepting both ICANN’s role and the opening of the industry to competition. As a result, dozens of other companies have now been approved to register domain names internationally.

International Activity

NSI reported in November that it registered 1.3 million new domain names for the third quarter, bringing its total to over 6.5 million. Some 30 percent of the new names were registered overseas, the company said, with Australia, China, Japan, Hong Kong and the U.K. leading the way.

The company reported revenue of $59.3 million for the quarter, up 133 percent over the previous year. Revenue for the nine months ended September 30th was $145 million.

NSI also said Tuesday that it will issue multi-year registrations and renewals of domain names for up to 10 years. The move allows companies to avoid the requirement that they register every two years. Amazon.com, Nasdaq and New Balance were the first to sign up for the extended registration period.

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