Austerity is for Suckers as Verisign Locks Up .COM

“2. ICANN OBLIGATIONS.

2.3.2 not unreasonably restrain competition and, to the extent feasible, promote and encourage robust competition;”

                              – ICANN Registrar Accreditation Agreement”

While the rest of the world faces austerity measures, governments and people are being told to tighten their belts and make do with less. The tech sector’s lot in life is usually in line with this, facing increased competition and falling pricing power. Not so for Verisign, who will soon have it’s contract to manage the .COM registry rubber-stamped by ICANN, locking in an annual 7% price hike into the base cost of .com domains.

As per usual, there was no competitive bidding process. If there was, we would not be looking at a base cost of .COM domains of 10.29 by 2016 (and that’s before the ICANN surcharges). When ICANN took over the management of the rootzone and farmed out the registry to Verisign (who already had it anyway), the base cost of a .COM domain was $6.

I have nothing against Verisign as a company, having been a shareholder at one time or another (because let’s face it, having a quasi-monopoly lock on the .com root is what Warren Buffet and his value investor ilk would call an extremely large “moat”). They are competent, and they know what they’re doing.  (But like the rest of us, they are fallible.)

If there was a competitive bidding process it is possible that Verisign would still  emerge victorious, but that doesn’t mean that there should not be one. At the very least it would put that 7% annual increase under intense competitive pressure.

I don’t view this as a problem with Verisign, I view this as a problem with ICANN.

This situation: where one company gets non-competitive contract renewals with generous price increases baked into the cake turns a blind eye to three main themes that we have taken issue with over the years:

1) That the .COM registry contract is a quasi-monopoly.

Contrast with the forthcoming wave of new TLDs (most of which will fail miserably), .COM was not chartered and paid for by a private interest – it originally came from the US Department of Defense and then transitioned to the National Science Foundation. Thus, it can be viewed as a public sponsored namespace, and has over time evolved into a “key public resource”[1] of international importance.

There are no indications that it will ever be opened to a competitive bidding process and as such – all .COM domain holders are locked in to whatever terms Verisign and ICANN agree to, including these built-in rate hikes.

The one-way street.

What is further aggravating is that even though Verisign had to divest out of the Registrar side of things in order to get and keep the .COM contract (the reason why Network Solutions was spun out) – they are still actively engaged in the managed DNS business. So while easyDNS is compelled to pay them for every single .com and .net domain our customers register, Verisign can and does actively pursue our managed DNS customers.

It’s not that I mind competition, but if there was at least the theoretical possibility that I could in turn, go after Verisign’s registry business then it wouldn’t feel like an uneven playing field. We have to duke it out with enough 800lb gorillas, but one of them gets to have a monopoly too?

2) Lack of global stakeholder representation.

All of which pales in comparison with the lack of global stakeholder representation when it comes to governmental and legal aspects of an international namespace. When easyDNS went on record opposing the original Verisign takedown proposal, then SOPA and finally the practice that US authorities were simply going straight to Verisign to takedown foreign owned domains – we were hammering home the fact that when the .COM root is run by a US entity it places all domains within that TLD under the legal jurisdiction of the United States.

That is a global stakeholder issue and in lieu of there being at least a competitive process or review of who gets to operate .COM, it’s never going to receive the debate it demands.

I’ve cautioned on this before: not addressing this issue will lead to a sentiment that perhaps an international body, instead of ICANN, needs to govern the root zone itself. In a worst case scenario it will eventually lead to a fragmented internet root.

3) ICANN needs to step up to the plate

Finally the elephant in the room. That “ICANN is not doing its job” is perhaps an overstatement. After all, they send me my bill for registrar accreditation fees without fail and my quarterly cheques to them for all those per-domain surcharges are cashed promptly and efficiently. Very soon they will commence collecting all those juicy new TLD application fees and I hear there’s going to be an ICANN meeting in Antarctica in 2015. So they’re working tirelessly. (If the justification for holding the ICANN meetings in every far-flung corner of the world is really to cultivate global stakeholder representation, as opposed to enjoying paid-for junkets, then surely they should at least pay lip service to the single biggest global stakeholder legal issue facing us all today).

What they are not doing is putting the global stakeholder issue front and centre where it needs to be. If they were to do that, then the quasi-monopoly issue would have to be addressed as part of that discussion.

ICANN is soliciting comments from the rabble public regarding this, so if you want to make your opinion heard, you can do so here. We posted our comment last night but it hasn’t shown up yet.

[1] “Key Public Resource” was a phrase coined by Michael Binder,  Canada’s then-Assistant Deputy Minister of Spectrum, Information Technologies and Telecommunications in a letter regarding the disposition of the .CA root.

 

Further Reading

2 thoughts on “Austerity is for Suckers as Verisign Locks Up .COM”

  1. Anonymous says:

    Nicely written as usual. It’s great hearing your commentary on these issues, thanks!

  2. It would be nice to see the contract opened up for competition. Domain registration fees, if anything, should be decreasing with an increased volume of transactions. I’d like to hear how and why their costs justify an increase of nearly twice the average US inflation rate over the last ten years. Meanwhile, VRSN stock is hitting 10 year highs…

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