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Dotcom hike will net MEEELLIONS of bucks for Verisign, ICANN

Domain prices to soar by a third in draft deal

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The cost of a .com domain name is expected to rise by at least 31 per cent over the next six years, due to new price-increasing powers granted to registry operator Verisign by industry overseer ICANN.

ICANN last night published a proposed draft of a new .com Registry Agreement, which it had negotiated privately with Verisign over the last few months.

The deal would give Verisign the ability to raise its annual registry fee for .com registrations by 7 per cent in four out of the next six years.

The pricing powers are identical to those permitted by Verisign's current contract. Verisign has raised its .com registry fee from $6 to $7.85 since 2006, exercising all four of its options to up prices.

Under the new deal, the registry fee for a .com would very likely increase to $10.29 by 2018. With over 100 million .com domains already online today, and growing by millions of domains per month, the right to increase prices by a third over today's level is worth hundreds of millions of dollars to Verisign.

Domain name registrars such as Go Daddy and eNom, which act as Verisign's channel, tend to mark up prices by anything from a couple of dollars to over $25 per year. Registry fee increases are almost always passed on to punters (and rounded up) at the checkout.

A few dollars extra on a domain name is unlikely to hurt many pockets, however. The price hike is largely of concern to domain investors holding large portfolios of monetised "parked" domains, and to corporate brand owners that own tens of thousands of defensive registrations.

What's in it for net overlord ICANN?

ICANN is also set to benefit financially from the renegotiated deal.

Terms in the current contract that make Verisign pay ICANN a capped quarterly fixed fee are to be scrapped and replaced with a provision for paying $0.25 for every .com domain registered, renewed or transferred between registrars. That's in addition to the $0.18 per-domain fee ICANN already collects from domain registrants via registrars.

Verisign is already the single largest contributor to not-for-profit ICANN's coffers, chipping in $18 million in ICANN's fiscal 2011. But the company would have handed over an extra $4.2 million if it had been using the new way of calculating fees, or $22.4 million in total, according to data revealed in ICANN's last published budget.

ICANN acknowledged last night that the new deal means "a substantial increase in Verisign's contribution".

On the 7 per cent price hike powers, ICANN noted that the provision dates back to the 2006 Registry Agreement, stating: "This provision was substantially negotiated between Verisign on the one hand, and the US Department of Justice and the US Department of Commerce on the other."

Due to the special nature of .com – it's responsible for about half of the world's registered domain names and has deep historical links with the US government – the Department of Commerce gets to take a look at the renewed agreement before it is signed.

The 2006 contract was penned following the settlement of an antitrust lawsuit Verisign filed against ICANN – in which the registry called it an illegal "regulator" – after the oversight body forced Verisign to abandon its controversial Site Finder service in 2004.

One of the most important provisions gave Verisign the "presumptive right" to renew the deal in perpetuity, explicitly prohibiting any competitive rebidding or changes in pricing controls.

Critics argued then, and have continued to argue, that the price of .com domains could be easily halved to just a few dollars per domain per year if the contract was opened to a competitive bidding process.

While not a lot has changed in the newly renegotiated contract, it does now contain amendments that would force Verisign to cooperate with ICANN compliance actions against third parties by, for example, suspending rogue registrars' ability to register new domain names.

ICANN would also receive broad legal indemnifications and the right to audit Verisign quarterly for compliance with its commitments.

The proposed contract is now open for public comment until 26 April. Anyone can submit a comment.

The boards of both ICANN and Verisign need to officially rubber-stamp the deal before it is signed. It will also need to be submitted to the US Department of Commerce for review before September. It's expected to come into effect 1 December this year after the current agreement expires. ®

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