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The Staffs of the Bureaus of Economics and Competition of the Federal Trade Commission ("FTC Staff") welcome this opportunity to respond to the National Telecommunications and Information Administration's ("NTIA") request for comments ("RFC") on its proposal to privatize the Internet Domain Name System ("DNS").(1) Internet domain names are the familiar and descriptive names for Internet sites (e.g., "www.ftc.gov"). They link to the unique Internet Protocol ("IP") numbers (e.g., 98.37.241.30) that serve as routing addresses on the Internet. The Domain Name System translates Internet names into the IP numbers required for transmission of information across the network. Currently, the registration and propagation of "top-level domain" ("TLD") names is carried out by a single firm that is under a soon-to-expire contract with the National Science Foundation.

The NTIA now proposes that the administration of TLDs, and the registration of domain names, be provided competitively by private, for-profit entities. The NTIA also proposes that certain other technical functions (e.g., management of number addresses; coordination of the root server system; dissemination of protocol parameters for Internet addressing) be carried out cooperatively (via a new not-for-profit corporation) by parties having vested interests in the efficient operation of the system.

As explained more fully in this comment, purchasers of domain name registration services might be subject to supracompetitive prices in the future if they become "locked-in" to a particular vendor of those services. The likelihood of a significant customer investment that results in "lock-in" is a detailed factual question on which this comment cannot reach a definitive conclusion. Economic analysis suggests, however, that purchasers may be able to take steps to reduce their vulnerability to higher prices from "lock-in" effects. In addition, higher prices arising from "lock-in" also could occur under alternatives to the NTIA proposal and under the current registration system. Finally, the benefits to consumers of introducing competition to the registration of domain names are likely to make the NTIA proposal, on balance, preferable to the current system.

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