The US Departments of Commerce and Justice are investigating the price increase provisions of Verisign’s .com registry agreement.
Verisign CEO Jim Bidzos disclosed the “review” on a conference call with financial analysts tonight.
It is likely that it will last beyond November 30 2012, the date the current .com agreement expires, he said.
“There’s a possibility it will not be complete by November 30,” he said.
A special six-month extension is likely to be triggered, he said.
“The status of our ability to operate .com is not an issue here,” he said.
He declined to comment on questions related to the likelihood that the company would be forced to change its pricing plans.
Verisign has spent $3.9 million in legal and other fees related to the US review, it emerged during the call.
ICANN approved the contract, which gives Verisign the right to increase its .com registry fees by 7% in four of the next six years, in June.
ICANN will see an extra $8 million in revenue from Verisign as a result.
Due to the special nature of .com, Justice and Commerce approval is required before the contract can be renewed. Verisign had previously expected that to come before November 30.
Verisign shares are trading down 14% in after-hours trading following the news.
Verisign will pay ICANN roughly $8 million more per year in fees under its new .com registry agreement, CEO Jim Bidzos told financial analysts last night.
Under the new deal, approved by ICANN last month, the company pays ICANN a $0.25 fee for every .com registration-year, renewal or transfer, instead of the lump sums it paid previously.
That’s going to work out to about $25 million in 2013, Bidzos said on Verisign’s second-quarter earnings call last night, compared to about $17 million under the old arrangement.
The new agreement continues to give the company the right to increase its price by 7% a year in most years, of course, so it’s not all bad news for Verisign investors.
The deal is currently under review by the US Department of Commerce and Bidzos said he expects it to be approved before November 30, when the current contract expires.
ICANN’s board of directors has approved Verisign’s .com registry agreement for another six years.
In a closed meeting on Saturday, the results of which have just been published, the board decided against making any of the changes that had been suggested by the community.
There had been a small uproar over the fact that Verisign will retain the right to increase its .com registry fee by 7% in four out of the next seven years.
The new contract also rejiggers the fees Verisign pays ICANN to bring them more into line with other registry agreements. As a result, ICANN will net millions more in revenue.
Other parties had also asked for improved rights protection, such as a mandatory Uniform Rapid Suspension system, and for the current restrictions on single-character domain names to be lifted.
But the board decided that “no revisions to the proposed .COM renewal Registry Agreement are necessitated after taking into account the thoughtful and carefully considered comments received.”
The agreement will now be forward to the US government for approval. Unlike most registry contracts, the Department of Commerce has the right to review the .com deal.
The current contract expires November 30.
ICANN’s board of directors is set to vote on Verisign’s .com registry agreement at a meeting in Prague this Saturday.
The meeting is scheduled for June 23, the day before ICANN 44 officially kicks off. Read the agenda here.
The contract has been controversial because it will continue to allow Verisign to raise prices by 7% in four out of the six years of its duration.
Opportunistic intellectual property interests have also called for Verisign to be obliged to follow new rights protection mechanisms such as the Uniform Rapid Suspension policy.
But I’m not predicting any big changes from the draft version of the agreement that was published in March.
If and when the ICANN board approves the contract, it will be sent off to the US Department of Commerce for, I believe, another round of public comment and eventual ratification.
If Verisign is to run into any problems with renewal, it’s in Washington DC where it’s most likely to happen.
ICANN’s key contract with the US government is open for proposals again, a month after ICANN was told its first bid wasn’t up to the expected standards.
The US National Telecommunications and Information Administration yesterday posted a revised request for proposals, looking for a new IANA contractor.
The IANA contract is what gives ICANN its operational powers over the domain name system root database.
Based on a quick comparison of the new RFP with the old, there have been few notable, substantial changes, giving little indication of why ICANN’s previous response fell short.
The RFP has a strong emphasis on accountability, transparency, separation of ICANN/IANA powers, conflicts of interest and the “global public interest”, as before.
While many of the requirements have been edited, clarified or shifted around, I haven’t been able to spot any major additions or subtractions.
The RFP now envisages a contract running from October 1, 2012 until September 30, 2015, with two two-year renewal options, bringing the expiry date to September 30, 2019.
The deadline for responses is May 31.
The current contract had been due to expire at the end of March but the NTIA unexpected extended it by six months just before ICANN’s meeting in Costa Rica kicked off last month.
The NTIA said it canceled the first RFP “because we received no proposals that met the requirements” but neither it nor ICANN has yet provided any specifics.
Over a month ago, at an ICANN press conference in Costa Rica, CEO Rod Beckstrom said: “We were invited to have a debriefing with [the NTIA] to learn more about this. Following that discussion we will share any information we are allowed to share.”
Since then, no additional information has been forthcoming.