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Verisign wastes no time jacking up domain prices

Sweetheart deal with ICANN ready to pay dividends

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Verisign yesterday announced in a press release that it will raise its registry fees for .com and/or .net domain names by seven per cent to $6.42 on October 15, 2007, as provided for in a controversial contract inked last March between the company and ICANN.

Although domain registration fees for the industry as a whole are on the downswing, the deal with Verisign provided for increases of seven per cent in four of any six years of the agreement. However, the deal also provides that in any year when the seven per cent rate increase clause is not exercised, under Section 7.3(d) of the contract Verisign will still be able to raise its prices by seven per cent that year if any of several contingencies are met, such as a “threat of attack on the Security or Stability of the DNS.”

One of the more controversial clauses in the contract, Section 4.2, also provided for default renewal of the .com contract with Verisign, unless a court or arbitrator rules that Verisign is in material breach of the contract. This should be quite a cash cow for Verisign – it will be worth $24m in just the first year - and with compounded interest, will add 31 per cent to the costs of registration in the first four years alone.

Nothing in the contract explains what a sufficient “threat of attack” is to justify an additional seven per cent price raise, but we expect the good folks at Verisign to clear that up for us in year five. ®

Burke Hansen, attorney at large, heads a San Francisco law office

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