Concerns Raised Over Potential .COM price Increases

ICANN Allows .COM Price Increases, Gets More Money. The proposed .COM price increase and the concerns it creates regarding the integrity of the DNS

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Concerns Raised Over potential .COM price Increases

Concerns Raised Over potential .COM price Increases

As you may have already heard, Verisign – the registry behind the world’s bestselling domain – .COM, is about to get a carte blanche to jack up pricing in the upcoming years. Since .COM is still the most popular TLD online, this news has spread waves of disapproval and confusion across the global domain name community. We’ve summarized all the events so far in order to give you a better idea of what the whole story is about. Time will tell how this will unfold from here on.

On January 3, 2020, ICANN announced significant changes to the contract it has with Verisign, Inc. to operate the top-level domain .COM.

ICANN and Verisign made these changes in secret, without consulting or incorporating feedback from the ICANN community or Internet users.

Under a proposed agreement, the price could rise to nearly $13.50 per domain over the next 10 years. The agreement allows Verisign, which has a contract to oversee .com domains, to raise the price by up to 7 percent per year over most of the next decade. Verisign would be required to pause price increases during two years (2024 and 2025), but it would otherwise have authorization to steadily raise prices through 2029.

What is the whole .COM fuss about?

Being the first popular TLD to hit the market more than 30 years ago, .COM is still the default No 1 choice for registrants with a market share of over 40%.

Along with the other domain “veterans” such as .NET, .ORG and INFO, etc. it is regarded as a legacy TLD in view of the new wave of domain extensions that debuted the market in recent years.

All legacy TLDs are supervised by ICANN which is expected to be a coordination body regarding policies and pricing. The companies that manage legacy TLDs are registry operators which are bound by ICANN to guard the public interest via special agreements. Initially, those agreements had annual price increase regulations and price caps baked in to prevent registries from going overboard with their pricing policies.

Over the years, various contract amendments were made to scale up the annual price increase rates for the legacy TLDs.

All that came to a head last year when ICANN lifted all price controls on .ORG and .INFO extensions.

At that time, .COM remained the only legacy TLD that was immune to price fluctuations thanks to a contracted price freeze in 2012.

Many domain market observers then predicted that the .ORG and .INFO price control removal was setting the stage for Verisign, the .COM and .NET registry, to have their price caps lifted as well.

So here we are, a year later with a newly proposed amendment to the Verisign agreement with ICANN which will allow the registry to raise prices considerably within the upcoming decade.

The price hike comes from an agreement Verisign reached in 2018 with the U.S. Department of Commerce which has some regulatory powers regarding .COM domains.

Following a year of negotiations, ICANN is close to incorporating the price increases into its agreement with Verisign.

This means it is approving a series of price hikes over most of the next decade, starting this year.

ICANN Will Receive an Extra $20 Million 

With the contract changes, Verisign agreed to pay ICANN an additional $20 million dollars over five years to support ICANN’s initiatives regarding the security and stability of the domain name system. There is no explanation why Verisign did this, how ICANN will spend the money, or who will ensure that the funds are properly spent.

Verisign Can Operate as a Domain Registrar

ICANN also had rules that the operator of a TLD could not operate a domain name registrar. Although in 2012 ICANN allowed operators of new gTLDs to have domain name registrars, it did not apply to Verisign. The new contract will allow Verisign to operate its own registrar, except for selling .COM domain names itself. To circumvent this, it is also possible that Verisign could act as a reseller of .COM domains, through another registrar.

This result is that the company that controls almost 80% of the registrar pricing for domain names will compete directly with all domain registrars, maximizing its control of domain name pricing to the detriment of other competing registrars. While this might result in lower prices to consumers, fewer registrars will harm competition, choice, and domain name services. 

Verisign’s registrar could also use its dominant position to charge higher prices to consumers, while at the same time raising registrar prices. 

ICANN Ignored Previous Comments

As detailed on Standing Up to ICANN to Keep Domain Prices in Check and, over 3,500 comments were submitted in support of price controls for the .ORG, .INFO, and .BIZ TLDs. Only six comments supported removing price controls. ICANN discounted the comments that were in favor of maintaining price caps. A number of the comments were submitted using an online tool, which caused the comments to be discounted as “spam” by the ICANN Ombudsman. 

Should this fundamental change to the domain market economics be regarded as a natural course of events?

Judging by the thousands of change-opposing opinions posted within the public comment period, the vision of the DNS remaining an open space, mindful of the public good is prevailing.

Let’s hope ICANN takes public opinion into account this time unlike with the previous .ORG sale consultation when more than 3000 comments were ignored as being ‘spam’.

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