ICANN and Verisign Renew .NET Agreement with 10% Increases Likely to See Registrar Fee of Over $15 by 2023 [updated]

verisign-net-logoVerisign has entered into a renewal of the .net Registry Agreement that runs for 6 years until 30 June 2023 with no changes to the material terms to the current .net Registry Agreement from 2011. There is an expectation the agreement will be renewed in 2023 “so long as certain requirements are met”.

Important to many is the fee and its annual increase, with the agreement allowing for Verisign to increase the price of a .net domain name registration by up to 10% in each calendar year during the term of the Agreement with 6 months’ notice required. The potential 10% increase each year for the Verisign fee charged to registrars is likely to see the registrar fee being $15.28 in 2023.

In approving the resolution to continue the agreement, the ICANN Board noted the agreement was comparable to the .org and .com agreements and with new provisions consistent with the comparable terms of the New gTLD Base Registry Agreement.

The fees charged by ICANN -accredited registrars for new and renewing domain name registrations is not to exceed $8.95 made up of a Registry Operator service fee of $8.20 and an ICANN fee of $0.75. Verisign is able to increase their Registry Operator fee by up to 10% each year, with 6 months’ notice to ICANN, meaning it’s most likely the fee charged to registrars will be $15.28 by the end of the agreement going by past experiences with Verisign charging the full increase allowed seemingly wherever possible.

With .net registration numbers having flatlined at best, hovering around the 15 million mark for the last 4.5 years, it seems the agreement will do nothing to spark registrations.

The fees charged by Verisign appear to have been the mostly contested provisions in the agreement with the Board noting criticisms “centred on the $0.75 fee Verisign pays to ICANN per .NET domain registration and why it is different from the $0.25 for other top-level domains. Concerns centred on the unfairness of having the burden of the extra cost being passed on to registrants and the value of the extra fees and how ICANN uses those fees. Requests were made to provide more insight and accountability as to how the funds are distributed to support ICANN’s ongoing mission to enhance the security and stability of the DNS and Internet and to improve participation in the Internet community.”

While noting the concerns, the Board supports the utilisation of these “funds to support the security and stability of the DNS and the Internet. Further, the Board encourages more activities to expand the Internet community by which the funds support ICANN projects such as the Fellowship Program and supports more efforts for ICANN to be transparent in the use of those funds for the intended activities.”

There were also “concerns that the .NET Registry Agreement has a presumptive renewal clause and believe the agreement should be open for competitive bid.”

There was disagreement on Exclusion of Rights Protection Management with the community split with regarding the exclusion of the new gTLD rights protection mechanisms and safeguards in legacy gTLDs. The Board noted “some commenters expressed support for the exclusion of certain rights protection mechanisms, such as Uniform Rapid Suspension and Trademark Post-Delegation Dispute Resolution Procedure, and the exclusion of the Public Interest Commitments (i.e., safeguards) contained in the New gTLD Registry Agreement stating that these are not consensus policies and registries should wait until a final decision is made via the Generic Names Supporting Organization (GNSO) Policy Development Process (PDP) . Others expressed concern over the exclusion of New gTLD rights protection mechanisms arguing that the provisions should not be borne only by new gTLD Registry Operators.”

However the Board believes ICANN “has no ability to make these provisions mandatory for any TLDs other than new gTLD applicants who applied during the 2012 New gTLD round. However, a legacy registry operator may agree to adopt these provisions during bilateral negotiations.”

On the Negotiation Process, the Board noted “commenters noted that while the new .NET Registry Agreement incorporates important technical and operational advantages from the new gTLD Registry Agreement it does not go far enough and should adopt the new gTLD Registry Agreement. Commenters suggested that if .NET does not transition to the new gTLD Registry Agreement more should be done to harmonize the provisions for consistency among Registry Agreements. Further, commenters noted a lack of transparency in the negotiation process between ICANN and Verisign and requested more exposure to the negotiation process before a Registry Agreement is finalised.”

To read the Registry Agreement Verisign has entered into with ICANN in full, see:
https://investor.verisign.com/secfiling.cfm?filingID=1014473-17-18&CIK=1014473

The Board resolutions are available at:
https://www.icann.org/resources/board-material/resolutions-2017-06-24-en#2.e