Verisign and the US Department of Commerce – Our Take
This morning, it was announced that Verisign and the US Department of Commerce had come to an agreement that allows Verisign to continue to operate the .com domain for another six years.
What was missing from that contract was the hot topic of conversation this morning – Verisign no longer has the right to four price increases of 7% over the term of the agreement. In other words, .com domains will likely remain prices at $7.85 until November, 2018 when the new agreement comes up for renewal again.
Verisign does have the right to increase prices if they can prove “extraordinary” expense resulting from and attack or threat of attack on the security or stability of the DNS. Any price increase would require Verisign to prove that the increase served the public interest before the Department of Commerce would approve.
Verisign could also seek a price increase if it could prove that market conditions no longer warranted the new restrictions that are put in place with this agreement. Again, that would require Department of Commerce approval.
Elliot Noss, Tucows President and CEO, says that the new agreement between the Department of Commerce and Verisign “rights a wrong in the last contract.”
Tucows has been very outspoken about .com pricing, and we were clear at the time of the last renewal that we did not believe Verisign should have been given the right to price increases.
It’s good news for registrants and the Internet as a whole.
Elliot also suggests that the new contract could even turn out to be good for Verisign going forward. The previous contract provided them with an opportunity to raise prices. As a public company with a fiduciary responsibility to maximize shareholder value, Elliot notes that investors, who often think in the short term, would put immense pressure on Verisign to exercise those price increases.
He goes on to suggest that having the option to raise prices four times in the next six years may have turned into a competitive disadvantage for Verisign given the new gTLDs coming online within the next 12 to 18 months.
By not having price increases available to them as a way to grow revenues, Verisign is will be driven to more efficiency and innovation. Certainly, the conference call Verisign hosted this morning featured a lot of talk of innovation, patents, and the addition of new value-added and revenue generating services like Distributed Denial of Service attack protection.
One thing is for sure, and perhaps this is the most important part of the contract extension announcement: Verisign continuing to be the operator of the .com extension for the next six years is great news for everyone. Verisign has proven itself to be an exceptionally good operator of the root. From a technology and service perspective, .com is clearly in good hands.
You can read the US Department of Commerce statement here.