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Verisign defends .com price increases

Kevin Murphy, November 2, 2012, 14:16:36 (UTC), Domain Registries

Verisign has assured investors that it is confident its .com registry agreement is not in jeopardy, after seeing its stock plummet due to uncertainties over the deal.

In a statement yesterday, the company also defended the planned continuation of its price-raising powers.

It emerged last week that the US Department of Commerce is looking into the pricing arrangements of the new .com deal, which ICANN approved back in June.

Commerce has the right — in consultation with the Department of Justice and others — to approve or reject the contract based on its security/stability and pricing terms.

Whatever happens, it’s virtually unthinkable that Verisign will lose the contract. The company said:

While the review process with the Commerce Department may extend beyond Nov. 30, 2012, it could also be concluded by Nov. 30, 2012. In either case, Verisign expects to continue to run the .com registry.

It also said that its ability to increase prices by 7% in four of the six years of the contract is in fact in the public interest, saying in a lengthy statement:

The .com registry has an unequaled record of achievement, with full availability of DNS resolution in .com for more than 15 consecutive years. The economic activity supported by the .com registry is significant by any measure in an environment where the consequences of a failure of even a very short duration or degradation of the Domain Name System (DNS) resolution service, due to either a cyber attack or failure of hardware, software, or personnel, would have significant economic and non-economic impacts to the global economy.

The level of security and stability offered by Verisign is only possible with investments in overcapacity and redundancy, network security, intellectual property (IP) and in human capital: The engineers and employees at Verisign who operate the .com registry and ensure its security and stability. The pricing terms of the .com Registry Agreement enable Verisign to make these investments, develop the necessary IP, know-how and purpose-built systems, respond to new threats to stability as they emerge, and recruit and retain the specialized talent necessary to maintain our network, including dozens of globally distributed constellation sites and data centers in the U.S. and elsewhere.

In essence, Verisign is saying that the security and stability record — which Commerce evidently has already reviewed to its satisfaction — are inextricably linked to its ability to raise prices.

The company’s share price fell 18% in the aftermath of last week’s news, but recovered slightly yesterday — gaining about 11% — after the statement was released.

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Comments (1)

  1. Philip Corwin says:

    ICA has posted its analysis of the press statement at http://internetcommerce.org/VRSN_Press_Statement

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