BancBoston Positive on NSOL
BANCBOSTON ROBERTSON STEPHENS
Keith E. Benjamin, CFA - 415-693-3285
June 25, 1999
NSOL HAS SOME FRIENDS IN WASHINGTON - We believe very little has really
changed competitively, despite lots of regulatory noise and confusion
regarding competitive implications. We expect ICANN to resolve most of
the issues sooner than later, leaving NSOL in a position to continue
taking advantage of its marketing lead. We were pleasantly surprised
this week by strong signs of regulatory progress. Tom Bliley, Chairman
of the House Commerce Committee, sent a formal complaint letter to ICANN
regarding the way it is handling the process of taking over management
of domain name registration. This committee is one of the key bodies
that crafts the laws that govern the Commerce Department and now ICANN.
Essentially, Bliley suggests that that ICANN has overstepped its
authority and is violating the spirit of its charter. The political
imperative is not to slow down the growth of the Internet. In
particular, Bliley criticized ICANN's plans to impose a $1 tax
registration fee on each domain name, to help pay for a $5.9 million
budget. In addition, Bliley expresses his anger over hearing threats by
ICANN to Network Solutions. ICANN had set a deadline of this week for
finalizing pricing for the registry function provided by NSOL to manage
the database. At this stage, we believe the current price of $9 per
year is fair and we would view it as very positive for NSOL if ICANN
decided to maintain the status quo. In our view, ICANN may have
underestimated the complexity of the process. We expect a formal
announcement that the test bed will be extended. We would view this as
positive for NSOL.
Other initiatives are ongoing to promote Internet growth. This week,
Senator Abraham of Michigan introduced a bill to make cybersquatting
illegal. Cybersquatting is when someone buys rights to a domain name
with the intention of reselling the name for a profit. Abraham's bill
calls for a first conviction to be considered a misdemeanor and a second
conviction a felony. This could help deal with trademark confusion,
which seems to be the biggest hurdle to overcome before additional
domain extensions might be approved by the Commerce Department.
Incremental domain names could expand the market for NSOL and others. |
