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VeriSign may settle CFIT lawsuit

Kevin Murphy, August 4, 2010, Domain Registries

VeriSign’s chief executive has not ruled out settling its potentially damaging lawsuit with the Coalition For ICANN Transparency out of court.

During the company’s second quarter earnings call earlier this week, Mark McLaughlin was asked whether there was a way the lawsuit could be made to go away, settling investor nerves.

His response: “It is an option that could be pursued.”

CFIT, backed by Momentous.ca, claims that VeriSign’s .com and .net no-bid contracts with ICANN, including the price increases they allow, are anti-competitive.

If VeriSign loses the case, it could face the loss of its .com and .net monopolies, which makes me think it will certainly seek to settle the case before that becomes a risk.

VeriSign currently has to decide whether to request a review at the Supreme Court, or go to the District Court for trial. It has until October 7 to make its call.

Also during Monday’s earnings call, McLaughlin addressed the growth opportunities VeriSign is looking at, following its renewed focus on the domain name business.

Asked whether the introduction of new TLDs would affect .com and .net growth, McLaughlin said:

I think it’s positive… just related to .com and .net, with the introduction of new TLDs there’s an expectation it just brings more people to the market and we generally do better when more people show up to the market. And the second thing, we intend to participate in some of those ourselves, so we see growth opportunities for us.

He also confirmed again that VeriSign will seek to launch non-ASCII internationalized versions of its existing TLD base, which includes .com, .net, tv and .name.

As Andrew Allemann noted yesterday, he also declared the pay-per-click-based speculative registration market essentially “dead”.

VeriSign antitrust claims will be heard in court

VeriSign has suffered another legal setback in its antitrust court battle with the Coalition For ICANN Transparency, after an appeals court ruled that CFIT has a case to be heard.

CFIT reckons VeriSign’s deal with ICANN to run the .com registry, which has a presumptive right of renewal and allows annual price increases, breaks US competition law.

Its complaint had been thrown out of court, but was restored on appeal last year. Today, VeriSign’s request for a rehearing was rejected, meaning the case is cleared for trial.

CFIT counsel Bret Fausett tweeted this evening that it will head either back to the District Court, or to the Supreme Court.

The news couldn’t come at a worse time for VeriSign.

The company has spent the last couple of years getting out of most of its non-domain markets, epitomized by the recent sale of its SSL unit to Symantec, so it is ultra-exposed to risk and uncertainty in its highly lucrative .com business.

For that reason, I doubt this case will ever see trial. We’re looking at a settlement, most likely. VeriSign’s probably going to have to break out the check-book.

CFIT is basically a front operation for Momentous.ca, owner of aftermarket player Pool.com.

More details on the Tuvalu-VeriSign deal

VeriSign offered Tuvalu an extra $1 million a year in exchange for the continuing right to run .tv, but the tiny island nation declined, according to a new interview.

The Australian Broadcasting Corporation has a short audio piece over here on the strained relationship between VeriSign and Tuvalu, including an interview with finance minister Lotoala Metia.

Tuvalu gets about $2.2 million a year from VeriSign, according to the piece, but the government thinks it’s being short-changed.

VeriSign offered the country another $1 million a year, on the condition that the deal would be extended for five more years. It currently expires in 2016. Tuvalu declined.

The company declined to comment to ABC, but AusRegistry chief Adrian Kinderis stepped up to defend the deal, pointing out that VeriSign took all the risk.

Kinderis also accepted the interviewer’s suggestion that the new TLD round could leave .tv “obsolete”.

Here’s a link to the stream.

Tuvalu not happy with VeriSign deal

The government of the Pacific island nation of Tuvalu feels it’s getting a raw deal under its current contract with .tv registry manager VeriSign.

According to Radio New Zealand International, Tuvalu finance minister Lotoala Metia said VeriSign pays “peanuts” for the right to run the .tv namespace:

We are negotiating but we are tied because of the agreement that was signed before us. We cannot negotiate for an increase until 2016. Counter offers have been made but they are not acceptable to the government of the day. So we have to stick to our guns now. They’re giving us peanuts.

VeriSign, and its predecessor registry, run .tv under lease as a generic TLD. It is of course Tuvalu’s country-code. By GDP, Tuvalu is one of the poorest nations in the world.

The RNZI article reports that Tuvalu receives $2 million per year from VeriSign. That’s possibly sourced from the CIA World Factbook, which estimated that amount for 2006.

Yet the CIA also says that Tuvalu receives $1 million per quarter, based on a 12-year, $50 million deal that started in 2000.

For all these facts to be true, the deal must have been renegotiated at some point since it was originally signed.

WSJ reporting bogus Indian domain name market info?

The Wall Street Journal is reporting that India “passed an Internet milestone of sorts” in the first quarter, when the number of .com domains registered in the country broke through 1 million.

Did it?

This is what the WSJ says:

[India] now has more than one million registered web sites using the suffixes .com or .net, according to data released today by VeriSign Inc., the U.S. company that tracks this sort of thing.

In its Domain Name Industry Brief, it reported that India now has a registered total of 1.037 million .com and .net domain names, up from about 800,000 in the same period the year before.

The number 1.037 million is terribly specific, considering that VeriSign’s Domain Name Industry Brief doesn’t say anything of the sort.

There’s nothing in the DNIB to suggest that anybody in India has ever registered a single .com domain.

The DNIB has never broken down .com registrations by location, and the Q1 report, released on Monday, doesn’t use the word “India” once.

If the WSJ numbers are accurate – the paper does appear to have interviewed a VeriSign India executive – I’m wondering how they were calculated.

It can’t be a case of tallying the number of .com domains managed by Indian registrars. Mumbai-based Directi alone has had more than a million .com names under its belt for a long time.

Could VeriSign be mining Whois records for location data?

It runs a thin registry, so it would have to reference Whois data acquired from its registrars in order to compute the numbers.

Or did the WSJ hit on unreliable sources? It seems possible.