Verisign .COM Registry Approval Held Up By US Govt Over Pricing Concerns, Which They Previously Agreed

Verisign logoVerisign may have successfully renewed their .COM Registry Agreement with ICANN and seemingly come to agreement with the US government, but are now having the pricing terms reviewed by the US government due to concerns over the previously agreed price increases.

The registry agreement sees a maximum price per .COM and .NET domain payable to ICANN for registry services to increase to $7.85 per domain on 31 December 2012, a substantial increase from the $6 per domain name that has been in place since the previous agreement was finalised in 2006. Prices could then increase by a maximum of seven percent per year afterwards for the life of the agreement. This ICANN fee will include a replacement of the lump sum quarterly fee with a fee based on $0.25 per transaction, a substantial increase in Verisign’s contribution.

While the fee increase is significant, and much above many ccTLD pricing structures who have been reducing their fees to registrars, ICANN notes that “if the .COM pricing provisions were to be changed to be similar to the other large gTLDs then that would most likely allow Verisign to raise prices by 10 percent per year in each of the six years of the agreement, as in the .BIZ, .INFO, .NET and .ORG agreements.”

In their latest financial results for the third quarter 2012, Verisign note their registry agreement to run .COM was approved by Verisign’s Board of Directors on 16 June, 2012 and ICANN’s Board of Directors on 23 June, 2012.

The next step in the process, in accordance with the Cooperative Agreement between the Department of Commerce and Verisign, Verisign submitted the .COM Registry Agreement to the Commerce Department for its review on 26 June 2012.

However the provision for fee increases “was substantially negotiated between Verisign on the one hand, and the U.S. Department of Justice and the U.S. Department of Commerce, on the other,” according to an ICANN announcement of 27 March 2012.

Now as a result of communications beginning in October 2012 with the Commerce Department, Verisign announced the Commerce Department may not complete its review and approve the renewal of the .COM Registry Agreement prior to its expiration on 30 November, 2012, and that the Commerce Department, together with the Department of Justice, is reviewing the .COM Registry Agreement’s pricing terms.

Pursuant to the terms of the Cooperative Agreement, if the .COM Registry Agreement is not approved by the Commerce Department prior to its expiration, the Commerce Department is required to agree to the extension of the .COM Registry Agreement for six months, or such other reasonable period of time as the Commerce Department and Verisign may mutually agree.

“We remain committed to providing unparalleled network and registry services performance as we work with the Commerce Department to renew the .COM Registry Agreement. Additionally, an area of emphasis for us is further enhancing our infrastructure to strengthen security and stability for both our customers and our own operations, in the face of new and ever-increasing cyber threats,” said Jim Bidzos, Verisign executive chairman, president and chief executive officer.

Other highlights of the third quarter financial results announced by Verisign include:

  • Verisign Registry Services added 1.37 million net new names and ended the third quarter with approximately 119.9 million active domain names in the zone for .com and .net, representing a 7.1 percent increase year over year.
  • In the third quarter, Verisign processed 7.8 million new domain name registrations for .COM and .NET, representing a 1.1 percent decrease year over year.
  • Verisign ended the third quarter with Cash, Cash Equivalents, Marketable Securities and Restricted Cash of $1.50 billion, an increase of $147 million from year-end 2011.
  • Cash flow from operations was $122 million for the third quarter compared with $108 million for the same quarter in 2011.

The full financial announcement is available here.