Domain name price hikes come under fire

WASHINGTON--A dispute over the cost of Internet domain names has spilled over onto Capitol Hill, where allegations of monopolization and unreasonable price hikes surfaced in a congressional hearing on Wednesday.

The dispute arises out of a lawsuit settlement reached on March 1 in which the Internet Corporation for Assigned Names and Numbers (ICANN) gave VeriSign the right to raise fees on .com domains by 7 percent annually. The settlement, approved by ICANN's board by a 9-5 vote, ended a legal spat that started with VeriSign's controversial move to take control of all unassigned .com and .net domain names in 2003.

Those guaranteed price hikes struck some members of the House of Representatives' Small Business Committee as unreasonable. "When you're talking about increased prices and you're allowed to do that at VeriSign, I don't know that's going to produce any better safety or security from anyone who's paying that additional cost," said Rep. Sue Kelly, a New York Republican. "And I haven't heard anything today that tells me that would be the case."

While ICANN--which was birthed by the Clinton administration--makes most decisions about domains on its own, the March settlement needs to be approved by the U.S. Commerce Department before it becomes final. That requirement has politicized the dispute, with registrars that sell .com domains and must pay the higher prices trying to gain ground in Washington against VeriSign, which has a far more muscular lobbying operation.

It was no coincidence, then, that Rep. Cliff Stearns, the Republican chairman of a House Energy and Commerce subcommittee, wrote a letter to the Commerce Department on May 26 saying the settlement "is crucial" to international commerce. "We should insist on an environment that provides ample resources and long-term legal certainty for this vital part of our economy," wrote Stearns, who has accepted money from VeriSign's political action committee.

Deal under attack
During Wednesday's hearing, domain registrars attacked the deal as a way to let VeriSign bilk consumers for the foreseeable future.

"I have no objection to VeriSign's continuing to run the .com registry," said W.G. Mitchell, CEO of Network Solutions (which split from VeriSign in 2003). "What I do have is an objection to it being done in a manner that gives a perpetual monopoly to a company with unregulated price increases."

Mitchell estimated that consistent 7 percent price increases over that time period would eventually yield $1.3 billion in new revenue for VeriSign--more than half of which would be paid by the estimated 10.5 million small businesses that use the Internet. He said the allowance of rate hikes is inconsistent with the agreement reached last year with VeriSign over the .net registry, in which the base price of domain names was actually lowered.

VeriSign and ICANN have defended the deal, making arguments about Internet security that have been echoed in letters sent to the Commerce Department by sympathetic politicians.

The agreed-upon percentage increase means that the most .com fees would rise between now and 2012 is $1.86, given the current wholesale .com domain name rate of $6, ICANN General Counsel John Jeffrey said.

"If I had to give up the latte I bought this morning in order to ensure that reliability remains the same, I'd do it in a heartbeat," said Craig Goren, CEO of Clarity Consulting, a 50-person information technology firm based in Chicago.

It's not clear what happens next. While Congress doesn't have the authority to block approval of the settlement unless new laws are enacted, even the threat of congressional action could spur the Bush administration to try to negotiate new concessions.

What's more, other members of Congress have raised red flags about the proposed agreement. Rep. Rick Boucher, a Virginia Democrat, urged the Bush administration in a letter earlier this year to examine the proposal carefully, saying it could have "serious anti-competitive implications." He also asked the House Energy and Commerce Committee to launch a formal investigation.

And in late May, Sen. Orrin Hatch, a Utah Republican, sent a letter of his own to Attorney General Alberto Gonzales in which he asked the Justice Department to scrutinize the deal for antitrust implications.

In responses to members of Congress, the Bush administration has expressed tentative support of the settlement. John Kneuer, a Commerce Department acting assistant secretary, said that "the resolution of long-standing and costly litigation would be a positive step." Kneuer added, though, that the Commerce Department is "in consultation" with the Justice Department's antitrust division.

[Akyan]

Disgusting

It is disgusting how verisign is allowed to continually increase the charges for .com addresses, I have addresses for web sites with .com's and .co.uk's and I get charged about half the price as it stands for .co.uk addresses. Why do verisign need to increase the prices and what advatange as a customer will I get because of it? It appears none...

What a con!

[dhayes501]

is it that bad?

i'm just as cheap as everyone else, but if domain names only cost an additional $1.86 6 years from now, i'll consider us to be pretty lucky. it seems prices on everything are going up much more quickly than that. on the other hand, if a $1.86 rate increase from Verisign gets multiplied by "x" by the middleman to drastically increase the end-users cost of domain names, then i'll have a problem.

[andrew999999999]

Yes, it is that bad.

If you're just buying one domain it's not a big deal. But if your business needs to buy 1,000, 10,000, or more domains, it is a significant hit.

It also bothers me that, in a competitive bidding process, VeriSign lowered the wholesale cost of .net domains. It makes it hard to justify price increases on .com domains. I believe there are economies of scale to running a registry. With the number of .com registrations growing ever day, the cost should be decreasing.

More here:
http://domainnamewire.com/2006/06/08/verisign-icann-settlement-gets-political/

[tbuccelli]

But costs are going down....

The issue I have is that they want to increase prices, but for what? Prices of most PC/network related items (with the exception of MS Software) are falling. They are just providing a database of used names for the '.com' domain - why do they need to charge more per address?

Also, $1.86 may not seem like much, but they get that for each '.com' domain for doing basically nothing. All they do is reply that a name is already in use (do they privide 'whois' also?) if someone requests it.

[R Me]

treat verisign

like a public utility.

The public deserves some regulated stability in the pricing structure of domain names. Its time Verisign acts like the utility they are and its time the G'ment regulated them like one. For a price hike to go into effect they should have to prove a need and if it looks like we are being overcharged for names, as I believe we are, there needs to be a class refund.

Verisign MUST be accountable to someone. As it is now they are only accountable to a lawsuit, which we all know is not a workable solution for those on the paying end of the deal.

[Seaspray0]

Verisign and ICANN not trustworthy

Registering a domain name simply reserves that in a database. That database does nothing on it's own. To put that database into action, you must have DNS servers. The root servers for .com, .net, .org, etc. are what makes it all work. They do the majority of the dirty work of resolving those domain names to IP addresses. .com is the leading root domain that gets resolved. If anything, we should be funding the root servers and not the "holder of the database". Does anyone know who pays the bills for the root DNS servers? The US government has jurisdiction on those DNS servers (it invented the internet, it has the right) and it should be overseeing the registration of domains, not ICANN and Verisign.

As far as registrations go, there is alot of improvement that needs to be done to improve the process. Too often, domains are registered with false information by spammers, and Verisign is responsible for that. So far, all they've proven to me is that they can be sloppy at their job and want a pay increase.

A few years ago, verisign actually changed how DNS resolution was done for domains that didn't exist. They redirected the non-existent domains to their own IP so web pages would pull up at verisign where they advertised their services. In the process, the messed up how mail servers were verifying domains to validate incomming emails as comming from a "real" domain (now all fake domains showed up as real... verisign's). Under pressure, that scheme was dropped, but I and many others have not forgotten that cheap tactic.

I do not trust ICANN, not after the attempt to transfer control of the root DNS servers to themselves. After seeing how the United Nations cowtows to special interests and 3rd world countries, I have little faith in international organizations doing whats right.