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US confirms Neustar to lose $475m-a-year contract

Kevin Murphy, March 30, 2015, Domain Registries

Neustar still seems set to lose a critical US government contract that provides half of its annual revenue.

The Federal Communications Commission voted unanimously last week to begin talks with rival contract bidder Telcordia, saying it will save the US consumer hundreds of millions of dollars a year.

Since 1997, Neustar has administered the telephone number portability system in the US. It’s not related to domain names.

Neustar, which also runs .us, .biz and .co, made $474.8 million from the deal in 2014, 49% of its annual revenue.

Commissioner Ajit Pai said in a statement:

Should we now declare Telcordia the next local number portability administrator? When you compare the numbers, the answer is clear. Last year, the current contract cost about $460 million. In contrast, Telcordia bid less than $1 billion for a seven-year term — that’s less than $143 million per year. That’s substantial savings for the American public.

Neustar told Bloomberg that the ruling was “procedurally defective” and that the company is “considering all options to address the significant flaws.”

Some kind of legal action to attempt to block the negotiations seems possible.

The company has also initiated a share buy-back to prop up its stock in light of the bad news.