In a 16 page letter sent by Phil Corwin the Internet Commerce Association (ICA) to the U.S. Department of Commerce (DOC) and the Department of Justice (DOJ), the ICA urges the DOC & the DOJ not to approve the renewal of the Verisign contract to operate the .com registry unless Verisign rolls back wholesale prices of .com domain names to the same price it charges for .net domain registrations and to limit price increases in the future to the increase in the Consumer Price Index (CPI).
Verisign (VRSN) reported during their earnings call about a month ago, that the contract to mange the Com registry is still under review by the Department of Commerce and Department of Justice.
In its letter, the ICA took a very strong position that the contract should only be renewed if price adjustments are made to the contract in both the base price and the price increases.
The argument is pretty simple.
Verisign operates the .net registry for a wholesale price of $5.86 per domain yet its charging $7.85 to manage the .com registry using the same facilities, staff, equipment and infrastructure.
There is no logical reason Verisign can operate the much smaller .net registry which has less than 15 million registrations for $2 less than the .Com registry which has around 105 Million domain registrations.
The second point is equally direct.
Verisign has a monopoly on the .com and .net registries and operates like a traditional utility company in that you cannot register a .com or a .net domain without Verisign getting paid as you can’t get electricity without paying your local electric company.
The difference is if your electric company wants a rate increase it has to go to the relevant commission that oversees it and show that its costs have increased and profits decreased and get approval for each and every rate increase.
Verisign on the other hand is entitled to a 7% rate increase in every 4 out of 6 years, without a showing of additional cost all the while when the company is operating at a greater than 50% profit margin.
Here is the highlights of letter which makes me proud to be a silver member of the ICA:
As the Department of Commerce (DOC) continues its review of the .com Registry Agreement in consultation with the Department of Justice, it is the view of the ICA that approval of its renewal with VeriSign should be approved as being in the public interest only if:
- The wholesale base price for .com domains is reduced from its present level of $7.85 to at least the same $5.86 price currently in effect for .net domains
- Future increases in the wholesale price of .com domains are limited during the six-year term of the new agreement to the increase in the Consumer Price Index (CPI) unless VeriSign submits additional information that provides sufficient documented justification to the satisfaction DOC that such higher pricing is required for the continued operation of the .com registry in a safe, stable, and secure manner. …
