A Washington DC-based special interest group, claiming to represent commercial users of the internet, has sued the federal National Science Foundation (NSF) and its partner, Network Solutions Inc, to force NSI to freeze the ‘infrastructure fund’ derived from charging for domain name registrations, alleging that the fund constitutes and unconstitutional tax. Judge Thomas Hogal has […]
A Washington DC-based special interest group, claiming to represent commercial users of the internet, has sued the federal National Science Foundation (NSF) and its partner, Network Solutions Inc, to force NSI to freeze the ‘infrastructure fund’ derived from charging for domain name registrations, alleging that the fund constitutes and unconstitutional tax. Judge Thomas Hogal has issued a preliminary injunction on Monday, preventing the NSF or NSI from crediting, spending, obligating or using any of the money, according to the filing in the District Court in Washington. Under federal law, a government agency cannot charge fees that exceed the cost of providing the service. And William Bode, the attorney for the group, the American Internet Registrant Association (AIRA), and also its chairman, is preparing two more filings for early next week that are sure to cause a great deal of concern in the internet community. The first filing is to make the preliminary judgement permanent, which will force NSF/NSI, pending any appeal, to re-distribute the fund, currently standing at about $50m, back to the internet community, if that can be made possible. The second new filing – which is even more controversial – will, says Bode, ask all monies NSI gets from registrations be placed in a court-monitored fund, and for NSI to refund all the fees it has gathered over the term of its contract – it has just under two months left of a five year agreement – over and above its costs, which Bode estimates to be no more than $15 per registration. NSI, under a five year cooperative agreement with the NSF, charges $100 for two years of domain name registration and puts $30 of that straight into the fund, as directed to do so by the NSF. NSI did not actually start charging for registering domains until September 1995, when it introduced charge of $100 per name for two years, and $35 for renewing it each year. In 1996 it registered 489,000 net new names, and 960,000 last year. The company says it has registered around 1.5 million active names. So, a very conservative estimate and some approximate calculations of $70 minus the $15 alleged costs, Bode is asking for NSI to cough up about $83m, and that’s without factoring in the renewal fees. NSI’s chief executive Gabe Battista told us Wednesday it will continue to collect the fund until directed to stop by the NSF and the suit would have no material affect on NSI. The fund is due to cease on March 31 anyhow. Ira Magaziner, the President’s senior internet policy advisor said he should not comment on such suits. However, yesterday the company would only defer inquiries about the matter to the NSF, which was still formulating a response when we inquired.