Here's a little history of NSI as I have culled it. (This is a little excerpt from my book, The Sex.Com Chronicles.) I love talking about NSI, and conspiracy theorists don't scare me. As far as white powder, that's the CIA connection, right?
From "The Sex.Com Chronicles" (Copyright 2003, Charles Carreon)
The history of NSI may give some clues. How did it get going? How did it gain so much power? What interests does it really represent? So now for the quick history of the Internet that will soon be learned in the cradle from the mouths of Internet Barbie and Virtual-War G.I. Joe.
In the beginning there was DARPA and ARPA, and their mission was to provide a redundant network for communication among defense and educational computer installations. By redundant we mean that even if one link in the system breaks down, the entire system continues to function. What is amazing is that these scientists managed to collaborate to create the system. Under the benevolent aegis of defense spending, unimpeded by the concerns of crass commercialism, the engineers designed communication protocols based on the UNIX computer language that enabled many different kinds of computers running different kinds of software to communicate over the phone lines.
In essence, the early Internet pioneers put universal communication functionality at the top of their priority list. The most important thing was for all of the computers to be able to talk to each other. Historically, the Internet was foreshadowed by the legend of the Tower of Babel. This early public works project was made possible only because human beings possessed a common language. According to Hebraic historians, utilizing this common language, the nations of the earth attempted to build a stairway to heaven. Jehovah became wroth with this demonstration of arrogance, and rather than burning the tower down as he might have on another day, struck on a more devious solution. Jehovah ââ¬Åconfused their speech.ââ¬Â He smote them with the curse of varying languages. The builders suddenly found themselves unable to communicate, and as a result, abandoned their plan to ascend to the heavens by means of a ladder.
Even if we canââ¬â¢t talk to each other, the Internet pioneers decided, our machines can! But the common language developed by the engineers had a disadvantage -- it was numerically-based, cryptic and engineer-like. Sure, an engineer can rattle off an IP address (thatââ¬â¢s ââ¬ÅInternet Protocolââ¬Â address) like his newbornââ¬â¢s birthday, but the rest of us have trouble remembering our phone numbers. So if I wanted my computer to call your computer, I would have to input all of these digits.
Along comes John Postel, the patron saint of the Internet, who certainly looked like a Deadhead, and worked for the University of Southern California Information Sciences Institute. While doing contract work for the U.S. government, Postel came up with a clever idea. Since anything arbitrary can equal any other arbitrary thing in the world of mathematics, why not equate numerical IP addresses with arbitrary strings of letters? Since any string of letters can equate to any string of numbers, all you need is a database that interrelates the strings of letters with the strings of numbers and automatically routes messages to the appropriate computer. And thus was born the age of the Dot-Com.
All IP addresses, decreed St. Postel, would end with a three-letter suffix, like .Gov, .Net, .Org, and most importantly to our story, .Com. To the left of the Dot, the user could put anything they wanted, up to a limited number of spaces. (This space has grown so much now, that domain names can practically be a paragraph long.)
Domain names, you might expect, would be a natural-born hit, a marriage of necessity and style. It was sort of bohemian, if you think about it. Bohemians started naming their cars to personalize the smog-belching carriages that rule and enable our lives. Now we could personalize our computers, and with more than mere sentimental effect. Naming your car is something you stop doing when you get your first real job (although the trend resurges among soccer moms, whose Suburbans proudly bear names like ââ¬ÅGreat White Beast,ââ¬Â inevitably chosen by the micro-Viking progeny of a true trophy blond).
But a name for your computer is not just a sentimental tag attached to a mechanistic object. It is a grubstake in the new economy. It is a homestead on the information frontier. It is a doorway to a community of knowledge, information and entertainment that is so compelling in its current, high-speed incarnation, that broadband users, who get more information faster, spend 28% more time at their computers than dial-up users. Dial-up now has market penetration roughly equivalent to that of television in the late 1950ââ¬â¢s. Meanwhile, the demographic profile of the average Internet broadband user is identical to the demographic of the dial-up user five years ago. I couldnââ¬â¢t have rattled off this stuff three years ago, and by the time you read it, the numbers will have changed. And yet it was all there in potential form in the early 1990ââ¬â¢s, a glimmer in John Postelââ¬â¢s eye.
When Postel invented them in 1984, domain names were adopted only by a tiny group of engineers spread around the country. They started emailing each other about their typical geeky topics, one of which was the future structure of the Internet. For about ten years it was basically managed by volunteers. In 1994, Postel wrote an email to some friends who were also helping to run the system, laying out the plan for an agency to administer the registration of domain names. Postel and his friends created an entity known as IANA, the Internet Assigned Names and Numbers Authority.
IANA operates out of a building in Marina Del Rey, California, and hosts a website at IANA.org; however, it does not have any corporate or governmental existence that Iââ¬â¢ve been able to discern from my research. In response to a lawsuit seeking to compel IANA to create a ".Web" top level domain name, Postel filed a declaration stating that IANA was merely a ââ¬Åfunction,ââ¬Â performed under contract for a security agency of the United States Department of Defense. Apparently, at one time, IANA had control over all of the domain names. Later, IANA transferred responsibility for managing the four main top-level domain names (.com, .net, .gov and .org) to the International Corporation for Assigned Names and Numbers ("ICANN.")
Meanwhile, the cash for funding the registration program came to be administered through the National Science Foundation, which put the domain name registration function out for bid to data processing companies. The contract was just for a few million bucks, so in May 1993 it went to NSI, a small company in Herndon, Virginia.
The National Science Foundation paid NSI to register domain names for free. In December, 1994, seven months after Gary Kremen registered Sex.Com, the NSF recommended that users start paying to operate the system. In May, 1995, NSI was bought lock, stock and barrel for $4.8 Million, by SAIC, Science Applications International Corp., a privately held San Diego company with a Board of Directors peopled by defense establishment magnates, including former Secretaries of Defense Melvin Laird and William Perry, former NSA chief Bobby Inman, and former CIA Directors Robert Gates and John Deutch. On September 14, 1995, NSI announced it would start charging $5 per domain name registration.
The cash cow started producing immediately. Between September 1995 and March 1996, NSI took in $20 Million in registration fees. The arrow just headed straight up from there, like an X-15 pilot in that movie, The Right Stuff. Boy, did NSI have it. Fueled with the power of absolute monopoly over a desirable resource, NSI went from being a cheap date to a supermodel in two short years, turning into a stock market darling at the beginning of the tech-IPO craze. NSI proudly described its glowing success in a July 1997 stock prospectus:
"Net registrations within the TLDs maintained by the Company increased by 233% from approximately 246,000 domain names registered at March 31, 1996 to approximately 818,000 domain names registered at March 31, 1997. The Company believes that commercial enterprises and individual Internet users worldwide are increasingly recognizing the .com TLD as a desirable address for commercial presence on the Internet. *** [T]he Company believes that the potential for continued growth of domain name registrations by commercial entities and services related to those registrations is substantial. Net revenue from Internet domain name registration subscriptions accounted for 76.5% of the Company's net revenue for the three months ended March 31, 1997."
The day NSI went public, at the opening bell on September 26, 1997, the market was drooling, and the first trade closed at $25/share, 40% above the $18/share offering price. By the end of the day, NSI had a market cap of $382.5 Million, and SAIC had sold enough stock to harvest a $9 Million profit, while keeping a 28% interest in the company. A little champagne was consumed in San Diego that night. The fruit of the Internet, born in the soil of DARPA, the Defense Advanced Research Project Agency, fell quite close to the tree.
Eventually, administration of the government contract with NSI passed from the National Science Foundation to the United States Department of Commerce and ICANN. A period of conflict between Commerce and NSI took place during 1999, with NSI taking the position that it ââ¬Åownedââ¬Â the right to register all .Com domain names in perpetuity. NSI also claimed it owned the entire database of five million .Com registrations that it had registered during the period of its government-created monopoly. In late 1999, NSI gave up its death grip on the .Com franchise and database when it agreed with ICANN to allow the creation of additional registrars who could compete in the registration of .Com and other domain names. However, above all of the registrars, NSI continued to hold the privileged position of being both a registry and a registrar.
There is only one domain name registry, and it is NSI. There are now many registrars, but they all must register their domain names with NSI, the world's only registry. For this service, NSI charges $6. Thus, if you register a domain name with any other registrar, $6 of what you pay goes to NSI. Meanwhile, NSI collects the $6 plus a premium of around $30 for every name that it registers directly through its NSI.Com registration portal. Itââ¬â¢s all good.
The agreement with ICANN in 1999 also provided that NSI would have to choose between being the registry and being a registrar by 2001. However, for those who read the papers closely in the tech section, it was disclosed in 2001 that NSI had managed to renegotiate the agreement, allowing it to continue operating as both the registry and a registrar until 2005. Since being acquired in March, 2000 by Verisign Corporation, NSI and its corporate parent are probably destined for a merger with Microsoft. (Anyone hear the opening strains of Terminator II?)
