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Verisign to keep price increase power under new .net contract

Kevin Murphy, April 21, 2017, Domain Registries

The wholesale price of a .net domain is likely to top $15 by 2023, under a proposed renewal of its ICANN contract revealed today.

ICANN-imposed price caps are staying in the new Registry Agreement, but Verisign retains the right to increase its fees by 10% in each of the six years of the deal’s lifespan.

But domain investors do have at least one reason to be cheerful — while the contract adds many features of the standard new gTLD registry agreement, it does not include a commitment to implement the Uniform Rapid Suspension anti-cybersquatting procedure.

The current .net annual fee charged to registrars is $8.95 — $8.20 for Verisign, $0.75 for ICANN — but Verisign will continue to be allowed to increase its portion by up to 10% a year.

That means the cost of a .net could hit $15.27 wholesale (including the $0.75 ICANN fee) by the time the proposed contract expires in 2023.

Verisign has form when it comes to utilizing its price-raising powers. It exercised all six options under its current contract, raising its share of the fee from $4.65 in 2011.

On the bright side for volume .net holders, the prices increases continue to be predictable. ICANN has not removed the price caps.

Also likely to cheer up domainers is the fact that there are no new intellectual property protection mechanisms in the proposed contract.

Several post-2000 legacy gTLDs have agreed to incorporate the URS into their new contracts, leading to outrage from domainer organization the Internet Commerce Association.

ICA is worried that URS will one day wind up in .com without a proper ICANN community consensus, opening its members up to more risk of losing valuable domains.

The fact that URS is not being slipped into the .net contract makes it much less likely to be forced on .com too.

But Verisign has agreed to several mostly technical provisions that bring it more into line with the standard 2012-round new gTLD RA.

For example, it appears that daily .net zone files will become accessible via ICANN’s Centralized Zone Data Service before the end of the year.

Verisign has also agreed to standardize the format of its data escrow, Whois and monthly transaction reports.

The company has also agreed to start discussions about handing .net over to an emergency back-end operator in the event it files for bankruptcy.

The current contract is due to expire at the end of June and the proposed new deal would kick in July 1.

It’s now open for public comment until June 13.

How .com became a restricted TLD

Verisign has been given approval to start restricting who can and cannot register .com and .net domain names in various countries.

Customers of Chinese registrars are the first to be affected by the change to the registry’s back-end system, which was made last year.

ICANN last week gave Verisign a “free to deploy” notice for a new “Verification Code Extension” system that enables the company to stop domains registered via selected registrars from resolving unless the registrant’s identity has been verified and the name is not on China’s banned list.

It appears to be the system Verisign deployed in order to receive its Chinese government license to operate in China.

Under Verification Code Extension, Verisign uses ICANN records to identify which registrars are based in countries that have governmental restrictions. I believe China is currently the only affected country.

Those registrars are able to register domains normally, but Verisign will prevent the names from resolving (placing them in serverHold status and keeping them out of the zone file) unless the registration is accompanied by a verification code.

These codes are distributed to the affected registrars by at least two verification service providers. Verisign, in response to DI questions, declined to name them.

Under its “free to deploy” agreement with ICANN (pdf), Verisign is unable to offer verification services itself. It must use third parties.

The company added the functionality to its .com and .net registry as an option in February 2016, according to ICANN records. It seems to have been implemented last July.

A Verisign spokesperson said the company “has implemented” the system.

The Verification Code Extension — technically, it’s an extension to the EPP protocol pretty much all registries use — was outlined in a Registry Services Evaluation Process request (pdf) last May, and approved by ICANN not long after.

Verisign was approved to operate in China last August in the first wave of gTLD registries to obtain government licenses.

Under Chinese regulations, domain names registered in TLDs not approved by the government may not resolve. Registrars are obliged to verify the identities of their registrants and names containing certain sensitive terms are not permitted.

Other gTLDs, including .vip, .club, .xyz .site and .shop have been granted approval over the last few months.

Some have chosen to work with registration gateway providers in China to comply with the local rules.

Apart from XYZ.com and Verisign, no registry has sought ICANN approval for their particular implementation of Chinese law.

Because Chinese influence over ICANN is a politically sensitive issue right now, it should be pointed out that the Verification Code Extension is not something that ICANN came up with in response to Chinese demands.

Rather, it’s something Verisign came up with in response to Chinese market realities. ICANN has merely rubber-stamped a service requested by Verisign.

This, in other words, is a case of China flexing market muscle, not political muscle. Verisign, like many other gTLD registries, is over-exposed to the Chinese market.

It should also be pointed out for avoidance of doubt that the Chinese restrictions do not apply to customers of non-Chinese registrars.

However, it appears that Verisign now has a mechanism baked into its .com and .net registries that would make it much easier to implement .com restrictions that other governments might choose to put into their own legislation in future.

Thick Whois policy for .com is now live

Kevin Murphy, February 2, 2017, Domain Registries

The domain name industry is kicking off one of its most fundamental shifts in its plumbing this week.

Over the next two years, Verisign and every registrar that sells .com domains will have to rejigger their systems to convert .com from a “thin” to “thick” Whois.

This means that by February 1, 2019, Verisign will for the first time control the master database of all Whois records for .com domains, rather than it being spread piecemeal across all registrars.

The switch comes as a result of a years-in-the-making ICANN policy that officially came into force yesterday. It also applies to .com stablemates .net and .jobs.

The first big change will come August 1 this year, the deadline by which Verisign has to give all of its registrars the ability to submit thick Whois records both live (for new regs) and in bulk (for existing ones).

May 1, 2018 is the deadline for all registrars to start submitting thick Whois for new regs to Verisign, but they can start doing so as early as August this year if they want to.

Registrars have until February 1, 2019 to supply Verisign with thick Whois for all their existing registrations.

There’s a process for registrars who believe they would be violating local privacy laws by transferring this data to US-based Verisign to request an exemption, which may prevent the transition going perfectly uniformly.

Some say that the implementation of this policy may allow Verisign to ask for the ability to ask a for an increase in .com registry fees — currently frozen at the command of the US government — due to its inevitably increased costs.

Personally, I think the added costs will likely be chickenfeed compared to the cash-printing machine that is .com, so I think it’s far from a slam-dunk that such fee increases would be approved.

ICA worried ICANN will force URS on .net

Kevin Murphy, January 5, 2017, Domain Registries

The Internet Commerce Association has called for a “moratorium” on the Uniform Rapid Suspension policy being added to legacy gTLD contracts, months before Verisign’s .net contract is up for renewal.

In a blog post, ICA counsel Phil Corwin accused ICANN staff of making policy by the back door by compelling pre-2012 registries to adopt URS, despite a lack of ICANN community consensus policy.

In the last few years the registries for .jobs, .travel, .cat, .pro, .xxx and most recently .mobi have agreed to adopt many aspects of the 2012 Registry Agreement, which includes the URS, often in exchange for lower ICANN fees.

Corwin wrote:

the real test of [ICANN’s Global Domains Division’s] illicit strategy of incremental de facto policymaking will come later this year, when the .Net RA comes up for renewal. We have no idea whether Verisign will be seeking any substantial revisions to that RA that would provide GDD staff with substantial leverage to impose URS, nor do we know whether Verisign would be amenable to that tradeoff.

The .net RA is due to expire July 1 this year.

Verisign pays ICANN $0.75 for each .net domain registration, renewal and transfer. If that were to be reduced to the 2012 standard of $0.25, it would save Verisign at least $7.5 million a year.

The URS provides brand owners with a way to suspend trademark-infringing domains in clear-cut cases. It’s based on UDRP but is faster and cheaper and does not allow the brand owner to seize ownership of the domains.

ICA represents large domain speculators, most of which have their investments tied up in .com and .net domains. It’s complained about the addition of URS to other gTLDs but the complaints have largely fallen on deaf ears.

ICANN has said that it does not force URS on anyone, but that it takes the base new gTLD program RA as its starting point for bilateral negotiations with registries whose contracts are up for renewal.

Thick Whois coming to .com next year, price rise to follow?

Kevin Murphy, October 27, 2016, Domain Registries

Verisign could be running a “thick” Whois database for .com, .net and .jobs by mid-2017, under a new ICANN proposal.

A timetable published this week would see the final three hold-out gTLDs fully move over to the standard thick Whois model by February 2019, with the system live by next August.

Some people believe that Verisign might use the move as an excuse to increase .com prices.

Thick Whois is where the registry stores the full Whois record, containing all registrant contact data, for every domain in their TLD.

The three Verisign TLDs currently have “thin” Whois databases, which only store information about domain creation dates, the sponsoring registrar and name servers.

The model dates back to when the registry and registrar businesses of Verisign’s predecessor, Network Solutions, were broken up at the end of the last century.

But it’s been ICANN consensus policy for about three years for Verisign to eventually switch to a thick model.

Finally, ICANN has published for public comment its anticipated schedule (pdf) for this to happen.

Under the proposal, Verisign would have to start offering registrars the ability to put domains in its thick Whois by August 1 2017, both live via EPP and in bulk.

It would not become obligatory for registrars to submit thick Whois for all newly registered domains until May 1, 2018.

They’d have until February 1, 2019 to bulk-migrate all existing Whois records over to the new system.

Thick Whois in .com has been controversial for a number of reasons.

Some registrars have expressed dissatisfaction with the idea of migrating part of their customer relationship to Verisign. Others have had concerns that local data protection laws may prevent them moving data in bulk overseas.

The new proposal includes a carve-out that would let registrars request an exemption from the requirements if they can show it would conflict with local laws, which holds the potential to make a mockery out of the entire endeavor.

Some observers also believe that Verisign may use the expense of building and operating the new Whois system as an excuse to trigger talks with ICANN about increasing the price of .com from its current, frozen level.

Under its .com contract, Verisign can ICANN ask for a fee increase “due to the imposition of any new Consensus Policy”, which is exactly what the move to thick Whois is.

Whether it would choose to exercise this right is another question — .com is a staggeringly profitable cash-printing machine and this Whois is not likely to be that expensive, relatively speaking.

The proposed implementation timetable is open for public comment until December 15.