Domain Name Org Gets Greedy

The helmsmen of Japan's Internet had an opportunity to steer clear of the monied shoals. They blew it.
This article contains Japanese characters.

Why the different treatment? Senior members of JPNIC, the nonprofit organization in charge of handling domain registrations in this country, are launching a for-profit .jp domain management monopoly likely to earn them bags of cash. Members of JPNIC -- that would mainly be the 400-plus ISPs who pay the organization fees to be official registrars -- were outraged by the .jp plans, announced in a meeting last November.

Japan's Internet community has long lobbied for fundamental changes in the way domain names are regulated (see "JPNIC Rethinks Weird Domain Name Rules," page 6, August 2000). Ridiculous rules covering .co.jp domain names include allocating such domains only to corporate entities registered in Japan, a prohibition on selling or transferring .co.jp domains once registered (owners can, of course, sell the parent company, a Kafkaesque outcome of which is great business for shell company brokers), and a limit of one .co.jp domain per registrant (note to Mazda: don't even think about trying for rx-7.co.jp).

Registering a domain is only half the battle, and hosting has also been subject to massive obfuscation, since only JPNIC-licensed members (principally large ISPs, but also major corporations) can serve as registrars and issue new names, and most of them require that registrants also contract to host the site on their servers. No hosting contract, no registration allowed. Critics have identified these and other Byzantine rules as major impediments to the growth of Japan's Net, hindering everything from ecommerce to the launch of new Net ventures.

At the same time, Japan's Net community has been buzzing with recent technical developments in IP addressing that have made double byte-encoded domains, which are suitable for native Japanese, Korean, and Chinese names, possible (see "Web Addresses Get Completely Japanese," page 7, July 2000).

Long-standing frustration with JPNIC's rules and excitement over the new naming technology combined last year to boost expectations in the community for a complete remake of the process, and many JPNIC members have been working behind the scenes to ensure 2001 would be a renaissance year for Japan's Net. "JPNIC members have been working hard to free things up," says Darshaun Nadeau, JPNIC member and principal at Tokyo-based domain name registrar startup JapanRegistry.com. Expectations have been particularly high for the new .jp domain, which many think will boost public use of the Japanese Net. Concerned observers such as Tokyo's American Chamber of Commerce and individuals in academe and business have also pushed for change.

Further impetus has come from JPNIC's own database, which showed a steep drop in the rate of country-level domain name registrations starting last May. By the fall of 2000, xx.jp registrations of all types (.co.jp, .ne.jp, .go.jp, et cetera) had reached some 220,000, whereas .com domains registered to individuals or companies with Japanese addresses had reached 2 million, according to statistics released by JPNIC.

It's not hard to imagine, then, the deep resentment felt by JPNIC members when details of the new .jp domain registration body became clear. The plan calls for JPNIC as an organization to be split, with a reduced-in-size, nonprofit entity inheriting management of the existing database (including .co.jp domains and their continued arcane limitations), while a new corporation, as yet unnamed, will handle the .jp domains. While this by itself is not necessarily a problem (domain name registrations are handled on a for-profit, monopoly basis in most other countries), the Internet community was stunned to learn that the new corporation's board would consist solely of existing senior JPNIC members, the corporation's source of capital (¥1 billion to start) would remain secret, and that all existing JPNIC members would have to reapply for (and pay for) membership in the new organization -- one in which they would have even less of a voice than they do now in JPNIC.

While the new for-profit body may be taking its organizational inspiration from America's ICANN (Internet Corporation for Assigned Names and Numbers), many observers accuse the founders of using the worst of Japan's closed, cozy, and corrupt business traditions as their animating guide. "JPNIC, as a non-profit organization, already has a bad enough reputation," explains Nadeau. "Then to all of a sudden announce that they're launching a monopoly and all the people who've worked so hard to build this will have to pay new membership fees and sign new contracts ... I've never seen so many upset and angry Japanese in my life. People were screaming; it was an incredible upheaval. Afterwards, the confirming vote had to be postponed. It was outta control," he adds, shaking his head. Bob Connelly, president at the Tokyo office of US-owned Web services firm PSI Japan, also attended the session. "The first guy who grabbed the microphone was shouting; there was a great deal of resistance to JPNIC's plans," he says.

Although the finalized policy had been revised based on public comment after JPNIC's draft proposal was published last year on September 1, it was clear that few, if any, of the members' concerns had been addressed. To JPNIC's credit, registration of the new .jp names has been more or less fully liberalized (see chart), and, since October 19 last year, Japan has for the first time had a dispute resolution process, managed by the Arbitration Center for Industrial Property (ACFIP). Further, the timetable for opening the .jp domain registration process appears to be more or less fair, with existing .co.jp domain registrants and trademark owners getting first kick at the can from January 22 to February 23 this year. Afterwards, JPNIC will oversee a resolution period (March 1-23), with any disputes arising from initial registration requests being resolved by draw, and then open registration will commence on a first-come, first-served basis on April 2, 2001. All .jp domains may go live as of July 2, 2001. Unfortunately, .jp domains will continue to be issued only through licensed registrars -- ISPs such as Nifty, So-Net, and interQ -- who have no incentive to lift their presumably lucrative no-host, no-registration policies.

Many of the November JPNIC meeting attendees complained that the new corporation will simply sit back and rake in profits while the licensed registrars do all the work -- and incur all the expense of selling the new domains. "Most members feel that JPNIC has done no marketing; that it's the members who have done all the work," says Nadeau.

Why the excitement over the domains? The .jp names, such as ニンテンドウ.jp (nintendo.jp) or ポケモン.jp (pokemon.jp), are expected to be intensely popular with Japanese surfers. The thinking is that marketing and selling ecommerce services will be that much easier when the URL names can be advertised -- and typed into home PCs -- in the customer's native language. Also, some companies wish to have all-Japanese domains, eschewing the globally popular .com domain as being too American. "Some of my clients are begging for the .jp names," adds Nadeau. PSI Japan's Connelly agrees that for Japanese companies, the .jp domains could be quite attractive (especially if the name itself can be rendered in Japanese kana).

An additional reason may be that Japanese companies, long used to doing business in a society that avoids open confrontation whenever possible, have no control over the international bilingual .com domains handled by various ICANN-licensed registrars and would be forced to resort to ICANN's (messy, publicized, and potentially embarrassing) dispute resolution process -- conducted in English -- to win back their native-language .com or .net domains should squatters grab them (as has already happened with English-language registrations like hitachi2000.com and epsonstore.com). They'd rather push for the .jp registrations, all aspects of which can be handled -- and to some extent controlled by corporate PR staff -- within JPNIC's (or the new monopoly corporation's) made-in-Japan procedures. Fears of cybersquatter extortion are not unfounded. Within a few days of the November 10, 2000 start of Japanese-language .com, .net, and .org registrations, the Japanese character versions of shiseido.com, i-mode.com, and pentax.com had been snapped up. Several of these domains, as well as others based on popular generic terms, were subsequently advertised on Japanese auction sites with prices as high as ¥100 million.

There is also support in the Japanese Internet community for approving Japanese character top-level domains such as .株式会社 (.kabushikigaishya -- corresponding to .com). If the new ICANN-like JPNIC corporation is the ultimate and sole source of these and the .jp domains, it's likely to make an awful lot of money.

And it's not just the furtive founders of the new JPNIC monopoly who see the potential of the new domains. PSI Japan is one company at the front of the new multilingual naming technology that will allow the .jp domains to be input, rendered, and displayed in Japanese characters, as well as English. The technology, developed by Singapore-based i-DNS.net (established in October 1999 from a partly-US-funded academic research effort at the National University of Singapore), is called RACE, for Row-based, ASCII-compatible encoding, and is based on recently finalized IETF (Internet Engineering Task Force) standards. "The new IETF standard allows double byte (Japanese) characters input by the user to be converted to UTF (Universal Multiple-Octet Coded Character Set Transformation Format) 8, then to UTF 16, then to Unicode 3.0, and then to RACE," explains Connelly. PSI Japan's multilingual domain name registration service was to launch on November 10, and firms like Connelly's expect demand for registrations in Japanese to be much higher than for other Asian double byte character sets; Japanese demand has driven "almost 100 percent" of his firm's efforts to bring the technology online. "We will certainly be up and running with multilingual domain registration services before JPNIC. It's a whole new [area of] profit potential," he adds. Tokyo-based ISP interQ, registry service Onamae.com, and US-based Registrars.com are three other firms that have announced plans to offer multilingual domain registrations (although only JPNIC members like PSI Japan, JapanRegistry.com, or interQ can offer xx.jp domains).

But if it's open confrontation that JPNIC management wishes to avoid, then the November meeting made it painfully clear that the sentiments of rank-and-file members will at least have to be considered, if not acted upon, and so there remains some hope for a rethink of the JPNIC proposals. The plans to have current JPNIC members pay additional fees to be licensed as registrars by the new for-profit corporation (initially announced on October 27), for example, had been dropped by the time of the November meeting, just one week later. Also, the wholesale rates for domain names charged to JPNIC members were similarly reduced in some haste. As we went to press, JPNIC had set up a members-only accessible portion of their Web site where members could post comments for discussion with other members and for review by JPNIC managers. "Everything could still change," says JapanRegistry.com's Nadeau.

For the sake of Japan's Internet, let's hope it does.