September 20, 2006 12:15 PM PDT

Senators question .com price increases

A long-running dispute over the cost of domain names and VeriSign's lucrative .com monopoly returned to Capitol Hill on Wednesday, with several U.S. senators questioning the current arrangement as uncompetitive.

Sen. Gordon Smith, an Oregon Republican, asked why VeriSign should have what critics have called a guaranteed perpetual income stream from .com domain registrations. The company currently receives $6 per domain, or about $323.4 million a year, from .com fees alone.

In March, the Internet Corporation for Assigned Names and Numbers, or ICANN, granted VeriSign the right to raise prices it charges registrars like GoDaddy and TuCows for .com domains by 7 percent annually. A coalition of registrars has filed a federal lawsuit to block the deal.

Although Wednesday's hearing was titled "Internet Governance: The Future of ICANN," it provided an opportunity to air general grievances about the way the domain name system works, including domain name squatters and VeriSign's control of .com.

Christine Jones, general counsel to registrar GoDaddy, testified that after the contract to run .net was put up for an open bidding process, the price registrars paid for .net domains fell. "VeriSign gets this huge windfall if this agreement is renewed," Jones said. "There is simply no reason that we can see to build in a price increase."

VeriSign's Ken Silva, its chief security officer, replied that .net and .com were hugely different creatures and could not be compared directly. "It's a different animal," Silva said of .net. "It's a much smaller zone." Silva said that the fees will go to provide a high level of security and reliability for .com.

Another topic that arose in the hearing convened by a Senate Commerce subcommittee is an agreement between the federal government and ICANN, which is scheduled to expire on Sept. 30. The agreement outlines ICANN's responsibilities dealing with domain names. (A similar agreement dealing with Internet addresses was renewed last month. )

"The short answer is that it should be extended," said John Kneuer, an acting assistant secretary at the U.S. Department of Commerce, adding that negotiations are under way to do just that. This is consistent with what the Bush administration has said in the past: that it will not hand over its unique influence over Internet governance to any other organization.

Other members of a Senate Commerce subcommittee suggested that ICANN should have approved an adult domain called .xxx instead of rejecting it. That domain could be used to segregate pornographers, they said.

"I don't believe we ever established a formal position one way or another," Kneuer said. The Bush administration last year asked ICANN to halt the process, citing "e-mails from individuals expressing concern about the impact of pornography on families and children."

ICANN President Paul Twomey said his group had received more than 100,000 complaints about .xxx from groups such as the American Family Association. ICANN's rejection of .xxx, Twomey said, had "a lot to do with the nature of the contractual language put before us by the applicant and the timing of the request" rather than an objection in principle.

VeriSign's guaranteed price increases came about as the result of a lawsuit filed by VeriSign against ICANN after the Site Finder flap in 2003, during which ICANN ordered VeriSign to halt a service that redirected expired or nonexistent .com and .net domains to the company's Web site. The settlement permits the 7 percent price increases for any four years of the agreement's six-year term. In addition, VeriSign would have a presumptive right to have its monopoly renewed after the agreement expires in 2012.

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10 comments

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GoDaddy's hypocrisy
I agree that VeriSign shouldn't hike prices, but GoDaddy doesn't have much room in its argument. After all, when VeriSign lowered the fee for registering .net domains, GoDaddy didn't lower its fee at all. GoDaddy didn't pass on any of the savings to its customers.

More here:
<a class="jive-link-external" href="http://domainnamewire.com/2006/09/20/domain-names-are-todays-topic-on-capitol-hill/" target="_newWindow">http://domainnamewire.com/2006/09/20/domain-names-are-todays-topic-on-capitol-hill/</a>
Posted by andrew999999999 (42 comments )
Reply Link Flag
Re: Godaddy's Hypocrisy
I can't speak for GoDaddy, but I'll say that VeriSign getting a
"guaranteed income from the .COM domain" is wrong. It smacks
of a backroom deal and provides no advantage whatsoever for
consumers.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Re: Godaddy's Hypocrisy
I can't speak for GoDaddy, but I'll say that VeriSign getting a
"guaranteed income from the .COM domain" is wrong. It smacks
of a backroom deal and provides no advantage whatsoever for
consumers.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Not really
You are free to transfer your domain away from godaddy at any time you would like. Theres a lot of competition at that level. You as the consumer, have the choice to get that savings. Whereas, no matter who you go with, youre stuck paying verisign their cut.
Posted by mrstacy (2 comments )
Link Flag
Corrections
Two corrections from the hearing:

1) One senator. not multiple as the story suggests. raised the issue of .com pricing. It was Sen. Gordon Smith and it was the last question asked at the hearing. There was no other senators left at that point.

2) Sen. Smith's questioning was focused on whether registries should have to cost justify an increase. He actually went out of his way to say he didn't know whether prices should go up or not.

I understand the difficulty for Declan since I don't believe he was actually present at the hearing and I'm guessing was listening to audio.
Posted by tgalvin-463 (3 comments )
Reply Link Flag
Corrections
Two corrections from the hearing:

1) One senator, not multiple as the story states, raised the issue of .com pricing. It was Sen. Gordon Smith and it was the last question asked at the hearing. There was no other senators left at that point.

2) Sen. Smith's questioning was focused on whether registries should have to cost justify an increase. He actually went out of his way to say he didn't know whether prices should go up or not.

I understand the difficulty for Declan since I don't believe he was actually present at the hearing and I'm guessing was listening to audio.
Posted by tgalvin-463 (3 comments )
Reply Link Flag
perpetual income stream
Why is congress all of a sudden so upset over someone having a strong income stream. After all, theirs is the highest guaranteed income stream around, and we don't get much of anything from them. How about the guaranteed income stream of every two bit service provider that makes you sign for one, two, or more years service contract for just about anything anymore. And let us not forget our faithful utilities, who charge you a minimum just for existing in their realm, like the water co, the gas company, the power company, etc, etc. Go on an extended vacation, and you still have to keep up the income stream, or if you disconnect, you will be charged a reconnect fee.
Seems like our Government should get out of VeriSign's face, and tell the .com people to write off the fee increase as business expense.
Posted by jevenew (13 comments )
Reply Link Flag
Almost Accurate Now
Declan revised his story to correct some errors, but unfortunately it still includes a pretty big error in the opening. One senator, as opposed to "several" as the story states, raised questions about the .com agreement. It was Sen. Smith and it occurred in the last 10 minutes of the hearing, when he was the only senator left.

So, its better, but not quite accurate.
Posted by tgalvin-463 (3 comments )
Reply Link Flag
I agree with 100%
Posted by uohaa (9 comments )
Reply Link Flag
Domain Costs has to be reduced. It is not fare to pay high costs. Let us change it
Posted by demosvalera (1 comment )
Reply Link Flag
 

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