Network solutions using questionable tactic to sell more domain names – TechCrunch

Network solutions was the only place you could buy a .com or other domain name. Years ago, they lost their monopoly rights and a flood of low-cost competitors entered the market. Today Network Solutions is a distant third in market share behind giants like GoDaddy and eNom. The main reason is the price. Network Solutions continues to charge $35 per year for a domain name, while others charge as little as $8 per year.

Network Solutions continues to make big bucks on renewals of all previously registered domain names (moving to a new registrar is a pain), but few new customers show up. Recently, however, they implemented a new “feature” designed to force certain users to register domains with them.

Since Tuesday, if a user searches the site for a domain name, Network Solution immediately registers the domain in its own name. If the user then goes to a discount registrar to register the domain, it appears as unavailable. The user must then either not purchase the domain or return to Network Solutions and pay their $35/year fee.

So far, they have registered over 72,000 domain names based on user searches. They are all temporarily assigned a “reserved domain name” name server – the number of records pointing to this server is public data and can be seen here.

It also costs nothing to the company. Registrars are allowed to register domains for five days without paying a fee to the domain name registry (in this case, Verisign). If they delete the domains after 5 days, which they almost certainly will, they don’t pay for registration.

The five-day grace period is designed to help registrars get away with credit card fraud, which is a big problem in the domain name industry. Many frauds are discovered very quickly – the grace period allows registrars to reverse these transactions without incurring a fee. The fact that Network Solution uses the grace period to prevent users from going to competitors is well outside the original reasons for the rule. Users are already shouting (we get emails). Expect competitors to yell afterwards and, of course, copy the behavior.

We last covered network solutions in October 2007.

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