For six years, Network Solutions held the keys to the commercial internet. Their monopoly over .com, .net, and .org registration generated hundreds of millions in revenue, inspired fierce opposition, and ultimately prompted government intervention. Understanding this era is essential to understanding why internet governance works the way it does today.
The Scope of Control
By 1997, Network Solutions controlled:
Registration Monopoly
Every .com, .net, and .org domain went through NSI. There were no alternatives. If you wanted a domain in these TLDs, you paid NSI or you didn’t get one.
The Database
NSI maintained the authoritative database of all gTLD registrations — millions of records. This data had immense commercial value.
Pricing Power
NSI set prices without competitive pressure. They could charge what they wanted, subject only to government oversight.
Policy Authority
NSI decided registration policies: dispute resolution, transfer procedures, WHOIS data requirements. Their policies became de facto law.
Root Zone Access
As the gTLD registry operator, NSI controlled what went into the .com, .net, and .org zone files that made the internet work.
The Numbers
The scale of NSI’s business became enormous:
| Year | Domains Under Management | Annual Revenue | Year-End Stock Price |
|---|---|---|---|
| 1995 | ~120,000 | ~$6M | $14 |
| 1996 | ~488,000 | ~$25M | $26 |
| 1997 | ~1.5 million | ~$75M | $22 |
| 1998 | ~3 million | ~$150M | $33 |
| 1999 | ~7 million | ~$350M | $100+ |
The company went from a small government contractor to a Wall Street high-flyer in four years.
Sources of Frustration
As NSI’s profits soared, so did complaints:
Price Gouging
Critics argued that NSI’s costs were minimal while their prices were high:
- Processing a registration: Mostly automated, cost pennies
- Registration fee: $35-50/year
- Profit margin: Estimated at 70-80%
NSI defended their pricing as necessary for service quality and infrastructure investment. Critics saw a monopolist extracting rents.
Customer Service Failures
As volume exploded, service quality suffered:
- Registration delays of days or weeks
- Billing errors and double-charges
- Lost domains due to processing mistakes
- Hours-long phone hold times
- Technical outages
One 1998 outage took down significant portions of .com for hours, affecting millions of websites.
Arbitrary Policy Changes
NSI’s policy changes often came without warning:
- Domain transfer restrictions: Making it hard to move domains away
- WHOIS accuracy requirements: Strict enforcement that could lead to domain seizure
- Dispute resolution: Inconsistent handling that often favored deep-pocketed litigants
The internet community had no input into these decisions.
Trademark Heavy-Handedness
NSI’s trademark dispute policy evolved erratically:
- Initially: NSI ignored trademark issues (not their problem)
- Then: Automatic domain suspension if anyone claimed trademark rights
- Later: More nuanced policies, but still criticized as unfair
Small domain holders were particularly vulnerable — they couldn’t afford lawyers to fight claims.
Lock-In Practices
NSI made switching away difficult:
- No standardized transfer procedures
- Deliberate friction for domain moves
- Registry data was proprietary
- WHOIS data locked to NSI systems
Even if competitors existed, escaping NSI was hard.
Industry Opposition
By 1997, opposition to NSI’s monopoly was organized and vocal:
The Internet Community
The technical community that built the internet saw NSI as an aberration. Internet standards were open. Internet protocols were freely implemented. Why should naming be a private monopoly?
Jon Postel — IANA operator and internet elder statesman — was particularly critical. He saw NSI’s commercial approach as contrary to the internet’s collaborative ethos.
Potential Competitors
Companies that wanted to enter the registration business lobbied aggressively for market opening:
- Register.com — Built systems ready to compete
- eNIC — Alternative registry proposals
- Various startups — Waiting for the market to open
They argued monopoly was inefficient and innovation-stifling.
International Governments
Non-US governments questioned why American companies controlled global naming:
- European Union — Called for international oversight
- Australia, Canada — Wanted more local control
- Developing nations — Felt excluded from governance
The “US-centric” critique would eventually force governance changes.
Consumer Groups
Consumer advocates raised alarms:
- Antitrust concerns — Monopoly pricing without competition
- Due process — Domains could be seized without adequate recourse
- Privacy — WHOIS exposed personal data without consent
NSI’s Defense
NSI wasn’t silent. They defended their position:
Investment Argument
“We invested heavily in infrastructure. Our reliability keeps the internet running. Competition could fragment this.”
Government Authorization
“NSF authorized our fees. We operate within our cooperative agreement. Don’t blame us for government decisions.”
Service Quality
“Our uptime is excellent. We process millions of transactions. This costs money.”
Transition Risks
“Breaking up registration could destabilize the internet. Change should be gradual.”
Some arguments had merit. DNS really did require careful management. But the profit margins undermined NSI’s case for continued monopoly.
The SAIC Factor
In 1995, Science Applications International Corporation (SAIC) — a massive defense contractor — acquired Network Solutions.
SAIC brought:
- Deep pockets for infrastructure and lobbying
- Government connections that complicated reform
- Corporate management focused on profit maximization
- Legal resources to fight competition
The acquisition made NSI harder to challenge. SAIC’s government ties created conflicts of interest for regulators.
Attempts at Competition
Multiple groups tried to introduce competition:
AlterNIC (1996)
AlterNIC created alternative TLDs (.xxx, .web, others) outside NSI control. Users could access these domains by using alternative root servers.
Result: Never achieved critical mass. Without broad adoption, alternative roots were useless islands.
eDNS/CORE (1997)
A group of registrars proposed the “Council of Registrars” (CORE) to introduce competition with new TLDs.
Result: Political battles prevented launch. The new TLDs were never activated.
Open RSC (1997)
An industry consortium proposed an “Open Root Server Confederation” as an alternative governance structure.
Result: Rejected by the existing power structure. The approach was seen as too radical.
All these efforts failed because they required either NSI’s cooperation (unlikely) or a complete break from the existing root (too risky).
The Breaking Point
By late 1997, pressure was overwhelming:
- DOJ investigation: Antitrust inquiry into NSI’s practices
- Congressional hearings: Public examination of internet governance
- International pressure: Demands for global representation
- Technical community revolt: Postel and others demanded change
- Industry lobbying: Potential competitors demanded market opening
The Clinton administration recognized that internet governance needed reform. The monopoly couldn’t continue.
The stage was set for dramatic intervention — and one of the most controversial moments in internet history.
Key Takeaways
- NSI controlled all .com, .net, .org registration from 1993-1999
- Revenue grew from $6M to $350M annually during this period
- Critics charged price gouging, poor service, and arbitrary policies
- SAIC’s acquisition strengthened NSI’s position
- Alternative root attempts failed to gain traction
- Industry, government, and international pressure eventually forced change
- The stage was set for dramatic intervention in 1998
Next
In 1998, Jon Postel — the man who had helped create the internet — took matters into his own hands. His dramatic redirection of root servers would expose the fragility of internet governance and accelerate the creation of ICANN.