Verisign Retains .com Control Until 2012

Several readers wrote to note that the U.S. Department of Commerce, in a controversial deal, has extended Verisign's control of the .com domain. Verisign got the right to raise prices in four of the six years of the contract, by up to 7% each time. From the article: "Verisign has control of .com and .net locked up for the next several years, but there will still be a modicum of oversight. [Commerce] retains final approval over any price hikes, and has said that any subsequent renewal of the contract will occur 'only if it concludes that the approval will serve the public interest in the continued security and stability of the Internet domain name system... and the provision of registry services at reasonable prices, terms and conditions.'"

Comments

Ob.non-us centric post

[tcdk]

Could we get this under control of some kind of international controlled non-profit organization, please?

Re:Ob.non-us centric post

[j00r0m4nc3r]

Short answer: No.

Higher prices

[Anonymous Coward]

They make it sound like the contract may not be renewed if they are too agressive with the price hikes. In reality, higher prices means more money to bribe.. er lobby the folks who will be renewing the contract. What is the justification for higher prices? The whole system is automated isn't it?

Re:Higher prices

[s20451]

The whole system is automated isn't it?

That's right. The only paid employees of Verisign are there to arrange the money in a big pile for the executives' Monday morning money fights.

Re:Higher prices

[Rob T Firefly]

What is the justification for higher prices? The whole system is automated isn't it?

They're still working on automating the process. For now it's still controlled by a ragtag group of retired plumbers and former telephone operators who all work part-time connecting the domain tubes. Most of your domain fees go toward their coffee and sandwiches.

Future decision criteria...

[xxxJonBoyxxx]

any subsequent renewal of the contract will occur 'only if it concludes that the approval will serve the public interest in the continued security and stability of the Internet domain name system

In plain English, "future renewal will depend on the quiet and timely delivery of large quantities of unmarked bills to key decision makers"

Re:It's a good thing if you ask me

[AchiIIe]

How would you like a single company filing for trademark on all permutations of 3, 4, 5 and 6 letter names -- and then turning around and selling those for 10 times more?

No, it is not a good thing.

[swbrown]

Verisign abuses their monopoly and shouldn't be allowed to keep it. http://www.theinquirer.net/default.aspx?article=11 569

Re:It's a good thing if you ask me

[markov_chain]

Yeah, raise prices! That way we can get rid of all those junky hobbyist and personal web sites, and ensure that only high-quality, well-produced sites can stay in business, like cnn.com, verizon.com, amazon.com, etc.</cynical>

Technology Advances

[Mr. No Skills]

Ugh. Like it gets more and more expensive to manage the process of keeping the .com database going. Why does GoDaddy charge my $10 and Verisign charges me $30.

Re:Technology Advances

[Anonymous Coward]

You seem to have little understanding of how domain registries work. They're talking about the registration fee paid by all registrars for every domain in Verisign's TLDs. This is less than $6, and it's being paid whether you use GoDaddy, Verisign, or any other registrar.

Re:Technology Advances

[aliendisaster]

Actually, unless they have changed, the registrar I used to work for payed $6.25/domain to Verisign.

Is it a coincidence?

[zappepcs]

or is this not when the Mayan calendar predicts that the world as we know it will end?

Re:Is it a coincidence?

[OxygenPenguin]

I guess that's one way of putting it. The mayan calendar predicts a massive change in the earth every 640 years, of which the next is 2012, as you noted. I suppose the end of the world "as we know it" would technically be correct, but a major planetary change, however initially subtle, is definitely coming up according to them.

Re:Is it a coincidence?

[Drooling Iguana]

640 years should be enough for anybody.

most companies should use .co.[country code]

[interactive_civilian]

I can't really say I care very much. Maybe I don't know very well how the internet works, but it seems to me that .com should only be reserved for GLOBAL commercial sites, and all other commercial sites should be .co.[country code] (.co.us, .co.uk, .co.ma, etc).

However, that is probably overly idealistic...

2012?

[aliendisaster]

Ohhhhh...That's why the Mayan Calendar ends in 2012.

Re:Why .com?

[MoxFulder]

Well, some languages are not national languages :-) I mean, let's say you want the Apple web page in Malayalam... that's a language that's spoken by 40 million people in India. What URL would you go to for that page? By comparison, Danish is spoken by only 6 million people, but since it's the national language of Denmark you can easily find it at www.apple.dk

I'd rather see web sites make consistent use of LANGUAGE codes rather than COUNTRY codes, like wikipedia does, e.g: en.wikipedia.org for English, nah.wikipedia.org for Nahuatl, etc.

Prices and Inflation

[dlevitan]

I see everyone screaming about the prices going up. I'm not happy about it either, and Verisign will definitely rake in the cash if it increases its prices by 7% 4 times, but its not as bad as everyone out there thinks. We're used to prices in computing going down. But my guess is that Verisign's current prices are needed to maintain the registry servers and staff. I'm sure they make a healthy profit out of it, but that's the goal of any business, and I doubt anyone else could beat them by much.

In terms of the 7% increases, look at it in terms of inflation. In 6 years, assuming 3% inflation, one would need about $1.20 for each dollar they have today. If Verisign increases rates by 7% four times, That's equivalent to a 30% increase in price. So what we really have is a 10% increase in the price of service, which looks a lot better. Also consider the fact that 6 years is a long time in the Internet/computer world. They may need that extra cash if something comes along that requires massive infrastructure changes.

Now, I'm not defending Verisign and I'm not saying its right for them to automatically raise prices by 30% over 6 years. I hope they'll show restraint and I personally wish the registrar contract selection was more competitive. But at the same time, I don't think this is a necessarily horrible deal assuming Verisign shows restraint, and its in their best interest not to be seen as a horrible company for the next time that their contract comes up for renewal.

It's actually not that big of a price jump

[ragingmime]

I, too, am less than thrilled about Verisign having exclusive control. The Internet is designed to be decentralized - we have numerous root DNS servers and a plethroa of ISPs, and it works just fine. I'd like to see a handful of "Official" registrars that can compete with each other are monitored by ICANN.

That said, don't forget that numerous important registrars (e.g. eNom) exist in addition to Verisign. I admit I'm not quite sure how this works - I guess eNom and others buy domains cheap from Verisign, and then resellers sell them again. As you probably know, they're cheaper - around 10 or 15 bucks - if you get 'em from a reseller like GoDaddy (er, if you like a healthy heaping of spam with your domains) or register4less.com (if you don't). I actually got a $5 domain with a 1-year hosting plan from ICDSoft. I'm not connected with any of those companies, just sayin'.

So, what if they do go for all four 7% price increases (presumably to cover increasing costs, inflation, etc.)? Let's do the math: $10 * (1.07^4) = $13.11 by 2012. That's assuming they bump up the price as much as possible during their 6 year control of the domain. Granted, that's also assuming that their weird structure of domain resellers stays in place. I'm honestly not sure how that works, but it hasn't shown any signs of disappearing so far, and I think there would be an outcry if it did.

Again, I'm not a fan of the situation from a stability/fairness standpoint, but I don't think the asking price for a domain is too high right now, and I don't think four 7% increases in six years is too much to ask of us.

Re:It's a good thing if you ask me

[Artifakt]

There's not anything directly under Department of Commerce's oversight duties, but there is something else under IRS and possibly its state equivalents that looks intriguing to me. (Warning: I am most seriously not a lawyer. I am a tax professional, but this is not my professional tax advice, it's mere speculation. I specifically have absolutely no knowledge of whether the IRS, or the taxation services of any U.S. states is/are currently considering any such interpretations or rulings as I discuss below. If you consider the following as investment advice, I can be held in no way responsible. That would be dumb, m'kay?)

Corporations normally enjoy advantagious tax status for just about all their investments, if for no other reason than because they can usually represent them as long term, and long term capital gains (over one year) has a much better base rate. If, however, IRS were to rule that selling a given domain name for a large markup was a pure 'windfall profit', this could in theory result in seperate windfall profit taxes, a higher base tax rate, and/or quite possibly even penalties on previous year's fileings. Costs of compliance with any such ruling would likely be entirely born by the corporation involved, and would likely need to be accomplished in no more than two quarters, with obvious risks to corporate liquidity and future profitability.

You ask (approximately) 'is there anything that says they can't?' - They still technically 'could', but under those circumstances, making money at it would be near impossible. Would such a ruling stand up long term, in tax court? Ask a fully trained legal specialist in the field, and if this impinges on your investment plans, my personal advice is to please make certain he or she is liscenced to practice both in your state or the state of incorporation and before the SEC and federal tax courts.