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Trump gives Verisign almost $1 billion in free money

Kevin Murphy, November 5, 2018, Domain Registries

The Trump administration may have just handed Verisign close to $1 billion in free money.

That’s according to the back of the envelope I’m looking at right now, following the announcement that the National Telecommunications and Information Administration is reinstating Verisign’s right to increase .com registry fees.

As you may have read elsewhere already (I was off sick last week, sorry about that) a new amendment to the Verisign-NTIA Cooperative Agreement restores Verisign’s ability to raise prices by 7% per year in four of the six years of the deal.

The removal of the Obama-era price freeze still needs to be incorporated into Verisign’s ICANN contract, but it’s hard to imagine ICANN, which is generally loathe to get into pricing regulation, declining to take its lead from NTIA.

Verisign would also have to choose to exercise its option to increase prices in each of the four years. I think the probability of this happening is 1 in 1.

Layering this and a bunch of other assumptions into a spreadsheet, I’m coming up with a figure of roughly an extra $920 million that Verisign will get to add to its top line over the next six years.

Again, this isn’t an in-depth study. Just back-of-the-envelope stuff. I’ll talk you through my thinking.

Not counting its occasional promotions, Verisign currently makes $7.85 for every year that a .com domain is added or renewed, and for every inter-registrar transfer.

In 2017, .com saw 40.89 million add-years, 84.64 million renew-years and 3.79 million transfers, according to official registry reports.

This all adds up to 129,334,643 revenue events for Verisign, or just a tad over $1 billion at $7.85 a pop.

Over the four-year period of the price increases transaction fees will go up to $8.40, then $8.99, then $9.62, then $10.29. I’m rounding up to the nearest penny here, it’s possible Verisign may round down.

If we assume zero transaction growth, that’s already an extra $762.2 million into Verisign’s coffers over the period of the contract.

But the number of transactions inevitably grows each year — more new domains are added, and some percentage of them renew.

Between 2016 and 2017, transaction growth was 3.16%.

If we assume the same growth each year for the next six years, the difference between Verisign’s total revenue at $7.85 and at the new pricing comes to $920 million.

Verisign doesn’t have to do anything for this extra cash, it just gets it.

Indeed, the new NTIA deal is actually less restrictive on the company. It allows Verisign to acquire or start up an ICANN-accredited gTLD registrar, something it is currently banned from doing, just as long as that registrar does not sell .com domains.

Verisign’s .net contract also currently bans the company from owning more than 15% of a registrar, so presumably that agreement would also need to be amended in order for Verisign to get into the registrar business.

I say again that my math here is speculative; I’m a blogger, not a financial analyst. There may be some incorrect assumptions — I’ve not accounted for promotions at all, for example, and the 3.16% growth assumption might not be fair — and there are of course many variables that could move the needle.

But the financial markets know a sweetheart deal when they see one, and Verisign’s share price went up 17.2% following the news, reportedly reaching heights not seen since since the dwindling days of the dot-com bubble 18 years ago.

The reason given for the lifting of the price freeze was, for want of a better word, bullshit. From the NTIA’s amendment:

In recognition that ccTLDs, new gTLDs, and the use of social media have created a more dynamic DNS marketplace, the parties agree that the yearly price for the registration and renewal of domain names in the .com registry may be changed

Huh?

This seems to imply that Verisign has somehow been disproportionately harmed by the rise of social media, the appearance of new gTLDs and some unspecified change in the ccTLD marketplace.

While it’s almost certainly true that .net has taken a whack due to competition from new gTLDs, and that the domain marketplace overall may have been diminished by many small businesses spurning domains by choosing to set up shop on, say, Facebook, .com is still a growing money-printing machine with some of the fattest margins seen anywhere in the business world and about a 40% global market share.

If the Trump administration’s goal here is to make some kind of ideological statement about free markets, then why not just lift the price caps altogether? Give Verisign the right to price .com however it pleases?

Or maybe Trump just wants to flip the bird to Obama once more by reversing yet another of his policies?

Who knows? It doesn’t make a lot of sense to me.

Trump’s ‘Muslim ban’ draws fire, creates confusion in ICANN community

Kevin Murphy, January 31, 2017, Domain Policy

At least two senior-level ICANN community members, including a new member of its board of directors, have been affected by US President Donald Trump’s controversial travel restrictions, imposed this weekend on the citizens of seven Muslim-majority nations.

The so-called “Muslim ban” has also attracted criticism from other members of the community.

Kaveh Ranjbar, Amsterdam-based chief information officer for RIPE/NCC and an ICANN director, said that he is unable to attend this week’s board retreat in Los Angeles because he holds an Iranian passport.

“I have checked this with ICANN’s general counsel and they have tried an external counsel with expertise in immigration,” Ranjbar told DI. “Their advice was that I might be able to travel but they were not sure. As you know the situation is really fluid and things change real fast.”

“After checking with the airline and looking at similar cases, I decided not to even try, because I did not want to risk deportation or being detained in the US,” he said.

Ranjbar was born in Iran but holds dual Dutch-Iranian citizenship.

He said he will participate remotely in the board retreat, likely until with 3am each day.

“However, the work of ICANN board is no different than any other board, it is mostly free exchange of ideas and discussing and challenging positions, outside of the formal setting of the meetings, that’s how you get a feel on your other colleagues positions and will be informed enough about their positions which will enable you to support or oppose with proper grounds and arguments,” he said. “I will miss that critical part.”

Non-Commercial Users Constituency chair Farzaneh Badiei is also affected. She’s Iranian, but recently relocated to the US on an academic visa.

She told NCUC members that she’s effectively stuck there, unable to attend an intersessional meeting in Iceland or ICANN’s March meeting in Denmark, for fear of not being allowed to return.

“I have been advised to take precautionary measures in light of the current draft executive order that might not allow current visa holders re-entry to the United States,” she said.

ICANN is still evaluating the situation.

“We are still trying to fully understand the potential impact of the President’s Executive Order on our community, Board and staff travelers. We want to ensure ICANN’s continued accessibility and openness,” a spokesperson said on Sunday.

ICANN does have Iranian-born staffers, but I’m not aware that any have reported travel problems as a result of the Trump move.

The travel ban has drawn fire from other related organizations.

Internet Society CEO Kathy Brown wrote that she was “deeply troubled” by the ban, adding:

Not only will the purported bans place an unwarranted burden on people in our organization, it is an anathema to the Internet Society whose values rest firmly on a commitment to an open, globally connected community dedicated to the open, global Internet. We are encouraged by the countries who have rejected the U.S. action this weekend and by the human rights organizations that have stood in solidarity with countless refugees and travelers who were so abruptly halted in entering the U.S.

The chairs of the IETF, IAOC and IAB indicated in a joint statement that they may reconsider holding future meetings in the US:

the recent action by the United States government to bar entry by individuals from specific nations raises concerns for us—not only because upcoming IETF meetings are currently scheduled to take place in the U.S., but also because the action raises uncertainty about the ability of U.S.-based IETF participants to travel to and return from IETF meetings held outside the United States….

Our next meeting is planned for Chicago, and we believe it is too late to change that venue. We recognize, however, that we may have to review our other planned meeting locations when the situation becomes clearer. We are already reviewing what to do as far as location for the next open North American meeting slot.

Meanwhile, the Internet Governance Project’s Milton Mueller blogged:

This has significant implications for Internet governance. Coordination and policy making for a global medium based on cooperation and voluntary standards requires open transnational institutions. Participation in those institutions requires the ability to freely travel. The United States can no longer be considered the leader, either politically or ideologically, of an open global Internet if its own society is mired in protective barriers… What a stroke of good fortune that the prior administration succeeded in freeing ICANN from the U.S. government in its waning months.

The travel ban is said to be “temporary”, lasting just 90 days, but some fear it may evolve into a permanent fixture of US policy.

Watch: Hollywood actors trash Trump, promote .vote

Kevin Murphy, September 22, 2016, Domain Registries

Robert Downey Jr, Scarlett Johansson, James Franco, that bloke who plays the Hulk, and a “shit-ton of famous people” are starring in a new anti-Trump attack viral that promotes a .vote domain name.

The video, put together by cult director Joss Whedon, gently spoofs quick-cut celebrity-ensemble appeals, while making a serious point about US presidential candidate Donald Trump being a threat to domestic race relations and global security.

It directs viewers to SaveTheDay.vote, where they are encouraged to register to vote in the November 8 poll.

Here it is:

It’s probably the highest-profile “in the wild” spotting of a .vote domain to date.

While I doubt it will work magic on .vote registration volumes, it’s certainly no bad thing for the visibility of new gTLDs in general.

At time of writing, the video had received about 1.2 million views on YouTube, less than 24 hours after its release.

.vote is an Afilias gTLD with post-registration usage restrictions. It currently has about 1,800 names in its zone file but only one domain in the Alexa one million most-visited sites.