The world’s largest domain name registrars have stepped up their fight against price increases in the VeriSign Inc’s .com namespace, calling on the Internet Corp for Assigned Names and Numbers to throw out a proposal to pump up prices.
Registrars representing 57% of the active .com names put their names to a letter demanding ICANN does not let VeriSign increase .com prices by 7% each year. One signatory was Network Solutions Inc, a former VeriSign subsidiary.
The proposed increases come as part of an agreement between ICANN and VeriSign that settles an antitrust lawsuit and extends VeriSign’s contract to operate .com until 2012, with a presumption of renewal after that.
The proposed agreement still harms the internet community by allowing unjustified price increases in most future years, when fees for .com should be decreasing, the registrars wrote. Even if this is indeed VeriSign’s ‘last and best offer’, it must not be ICANN’s.
The letter was signed by senior executives from Go Daddy, NSI, Tucows, Melbourne IT, Schlund, Register.com, Intercosmos and BulkRegister.
If VeriSign were to exercise the right to increase fees 7% in four of the next six years, as the deal would allow and some financial analysts have built into their VeriSign revenue models, registrars would be forced to raise prices or accept lower margins.
They characterize the price increases as a freebie that VeriSign has not earned and cannot justify by saying it is burdened with higher costs.
Bob Parsons, chief executive of market share leader Go Daddy Software Inc, said that VeriSign’s costs should be going down as server prices are down 10-18% over the last three years, bandwidth costs are down 35% since 2001, and storage is down 45% since 1999.
Under no circumstances should VeriSign be allowed to raise .COM prices without cost-based justification, said Parsons. If VeriSign does request an increase, it needs to result in competitive bidding for the registry contract. This would certainly create lower prices, not higher, just as it did for the .NET registry.
VeriSign, when it was forced to bid against competitors to keep hold of the .net registry, lowered its prices in order to win an extension to the contract.
VeriSign argues that the right to run .com with presumptive renewal, meaning without having to compete, and have some flexibility with pricing, creates the incentive for it to invest in the infrastructure to make it more secure and reliable.
But the registrars say that VeriSign has not even yet proved that it has fulfilled a previous commitment to invest $200m in the .com infrastructure. That investment is demanded by its current .com registry contract.
In searching for some ‘grass roots’ user support for VeriSign’s position, we were able to locate some folk who believe that increases in the price of domain name fees could lead to a higher quality of content on the web.
Higher prices, some say, would hold back the tide of superficial keyword-laden web pages being launched purely to attract searchers that can be converted into advertising clicks through the advertising networks of Google or Yahoo.