Verisign defends .com price increases

Verisign has assured investors that it is confident its .com registry agreement is not in jeopardy, after seeing its stock plummet due to uncertainties over the deal.
In a statement yesterday, the company also defended the planned continuation of its price-raising powers.
It emerged last week that the US Department of Commerce is looking into the pricing arrangements of the new .com deal, which ICANN approved back in June.
Commerce has the right — in consultation with the Department of Justice and others — to approve or reject the contract based on its security/stability and pricing terms.
Whatever happens, it’s virtually unthinkable that Verisign will lose the contract. The company said:

While the review process with the Commerce Department may extend beyond Nov. 30, 2012, it could also be concluded by Nov. 30, 2012. In either case, Verisign expects to continue to run the .com registry.

It also said that its ability to increase prices by 7% in four of the six years of the contract is in fact in the public interest, saying in a lengthy statement:

The .com registry has an unequaled record of achievement, with full availability of DNS resolution in .com for more than 15 consecutive years. The economic activity supported by the .com registry is significant by any measure in an environment where the consequences of a failure of even a very short duration or degradation of the Domain Name System (DNS) resolution service, due to either a cyber attack or failure of hardware, software, or personnel, would have significant economic and non-economic impacts to the global economy.
The level of security and stability offered by Verisign is only possible with investments in overcapacity and redundancy, network security, intellectual property (IP) and in human capital: The engineers and employees at Verisign who operate the .com registry and ensure its security and stability. The pricing terms of the .com Registry Agreement enable Verisign to make these investments, develop the necessary IP, know-how and purpose-built systems, respond to new threats to stability as they emerge, and recruit and retain the specialized talent necessary to maintain our network, including dozens of globally distributed constellation sites and data centers in the U.S. and elsewhere.

In essence, Verisign is saying that the security and stability record — which Commerce evidently has already reviewed to its satisfaction — are inextricably linked to its ability to raise prices.
The company’s share price fell 18% in the aftermath of last week’s news, but recovered slightly yesterday — gaining about 11% — after the statement was released.

US probing Verisign price hikes, .com contract may be extended

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.

ARI expands its DNS business

ARI Registry Services officially announced its aggressive targeting of the DNS services market at an event in Toronto last week.
The company says it is the named DNS provider in over 450 new gTLD applications, giving it a substantial foot in the door should they be approved by ICANN.
That’s almost three times as many applications as ARI is involved with as registry provider.
“To our competitors, we are coming for you,” a tired and emotional ARI CEO Adrian Kinderis said during the launch event at a club in Toronto last Tuesday, which DI attended.
“Bring it on,” equally tired and emotional executives from larger competitors were heard to mutter in the audience.
ARI seems to be targeting just TLD operators to begin with, while competitors such as Verisign, Neustar and Afilias also offer managed DNS to enterprises.
ARI already runs the DNS for Australia’s .au.

Soon Verisign could sell .com domains direct

With little fanfare, ICANN last week formally approved new rules that could allow incumbent registry operators to own registrars that sell domains in their own gTLDs.
The policy would give the likes of Verisign, Neustar and Afilias the right to become affiliated with registrars that sell .com, .biz and .info names respectively.
These registries would have to sign up to the standard new gTLD registry agreement first, or submit to contract renegotiation in order to drop their current cross-ownership bans.
In either case, they would become bound by the new registry Code of Conduct, preventing them from offering preferential terms to their affiliated registrars.
The new rule came into effect following the ICANN board meeting on Thursday, at which this resolution was passed.
ICANN had already dropped cross-ownership restrictions for new gTLD registry operators, but held back from bringing in the same rules for incumbents due to concerns from competition authorities.
After exchanges of letters with the European Commission and US Department of Commerce, these concerns appear to have dried up, however. ICANN said in its resolution:

it appears that there is no longer any reason against extending the approved process to existing registry operators for their own TLDs.
This action will be an advantage for the ICANN community, as it will provide the opportunity for treating all registry operators equally with respect to cross-ownership restrictions.

Registries would have their requests for contract changes referred to competition authorities for comment before ICANN would approve them.
Based on previous comments, Verisign might have a struggle with respect to .com but the other incumbents might have an easier time renegotiating their deals.
Neustar has been particularly outspoken in its desire to get rid of the contractual language preventing it owning a .biz registrar, so we might see that company first to get into talks.
Both .biz and .info contracts are up for renewal before the end of the year.

Worldwide domains up to 240 million

There are now more than 240 million registered domain names on the internet, according to Verisign.
Its latest Domain Name Industry Brief reports that a net of 7.3 million names were added across all TLDs in the second quarter, a 3.1% sequential increase, up 11.9% on Q2 2011.
Verisign’s own .com and .net hit 118.5 million domains by the end of June, up 1.6% sequentially and 7.8% year-over-year. Renewals were at 72.9%, down from 73.9% in Q1.
The company reported that new .com and .net registrations in the period totaled 8.4 million.

Whacky lawsuit targets ICANN, eNom, CentralNic, NetSol, Verisign

ICANN and several domain name companies have been slapped with a bizarre, virtually incomprehensible anti-cybersquattng lawsuit in Virginia.
Canadian Graham Schreiber, registrant of landcruise.com, has beef primarily with CentralNic — the UK-based company that sells third-levels domains under us.com, uk.com and the like — and one of its customers.
As far as I can tell, the complainant, who’s representing himself pro se, has issues with CentralNic’s entire business model. Here’s his complaint (pdf).
He discovered that a British individual named Lorraine Dunabin — who has a UK trademark on the word Landcruise — had registered both landcruise.co.uk and landcruise.uk.com.
Having failed to take the .co.uk using Nominet’s Dispute Resolution Service (repeatedly referred to in the complaint as UDRP), Schreiber has instead filed this lawsuit to accuse Dunabin of “Dilution, Infringement [and] Passing off” by registering the .uk.com.
CentralNic is named because it owns .uk.com and various other geographic pseudo-gTLDs, which Schreiber says “dilute the integrity of .com” and amount to a “shakedown”.
Verisign is named as a contributory infringer because it runs .com. Network Solutions and eNom are named because they manage uk.com and landcruise.uk.com respectively as registrars.
ICANN is named because… I don’t know. I think it’s because all of the other companies are ICANN contractors.
ICANN, which has a web page for the litigation here, has already filed a motion to dismiss (pdf).
Schreiber is seeking monetary damages from all of the defendants, most of which he wants donated to the Rotary Club.

Why .com still doesn’t have a thick Whois

ICANN’s board of directors quizzed staff about the lack of a “thick” Whois obligation in Verisign’s .com contract, according to meeting minutes released last night.
The vote was 11-0 in favor, with four abstentions, when the board controversially approved the deal during the Prague meeting in June.
Director George Sadowsky raised the thick Whois issue, which has been a sharp wedge issue between non-commercial users and the intellectual property lobby, according to the minutes.
Senior vice president Kurt Pritz responded:

Kurt noted that while a requirement for a “thick” registry had been a topic of conversation among ICANN and Verisign, the ongoing GNSO Policy Development Process initiated on this same issue rendered this topic somewhat ill-suited for two-party negotiations. In addition, the current .COM registrants entered registration agreements with the understanding of .COM as thin registry, and the resultant change – along with the ongoing policy work – weighed in favor of leaving this issue to policy discussions.

In other words: thick Whois is best left to community policy-making.
Thick Whois is wanted by trademark holders because it will make it easier to enforce data accuracy rules down the road, while non-commercial stakeholders oppose it on privacy grounds.
Domainers, at least those represented by the Internet Commerce Association, have no objection to thick Whois in principle, but believe the policy should go through the GNSO process first.
Verisign is publicly neutral on the matter.
The ICANN board vote on .com was considered somewhat controversial in Prague because it took place before any substantial face-to-face community discussion on these issues.
Sadowsky abstained, stating: “I feel very uncomfortable going forward with provisions that will tie our hands, I think, in the long run without an attempt to reach an accommodation at this time.”
Three other directors (Tonkin, De La Chapelle and Vasquez) abstained from the vote due to actual or the potential for perceived conflicts of interest.
The .com agreement is currently in the hands of the US Department of Commerce which, uniquely for a gTLD, has approval rights over the contract. It’s expected to be renewed before the end of November.

Verisign demands 24/7 domain hijacking support

Verisign is causing a bit of a commotion among its registrar channel by demanding 24/7 support for customers whose .com domains have been hijacked.
The changes, we understand, are among a few being introduced into Verisign’s new registry-registrar agreement for .com, which coincides with the renewal of its registry agreement with ICANN.
New text in the RRA states that: “Registrar shall, consistent with ICANN policy, provide to Registered Name Holders emergency contact or 24/7 support information for critical situations such as domain name hijacking.”
From the perspective of registrants, this sounds like a pretty welcome move: who wouldn’t want 24/7 support?
While providing around the clock support might not be a problem for the Go Daddies of the world, some smaller registrars are annoyed.
For a registrar with a small headcount, perhaps servicing a single time zone, 24/7 support would probably mean needing to hire more staff.
Their annoyance has been magnified by the fact that Verisign seems to be asking for these new support commitments without a firm basis in ICANN policy, we hear.
The recently updated transfers policy calls for a 24/7 Transfer Emergency Action Contact — in many cases just a staff member who doesn’t mind being hassled about work at 2am — but that’s meant to be reserved for use by registrars, registries and ICANN.

Verisign reveals “dark” .com domains

Verisign has started publishing the daily count of .com and .net domain names that are registered but do not work.
On a new page on its site, the company is promising to break out how many domains are registered but do not currently show up in the zone files for its two main gTLDs.
These are sometimes referred to as “dark” domains.
As of yesterday, the number of registered and active .com domains stands at 103,960,994, and there are 145,980 more (about 0.14% of the total) that are registered but do not currently have DNS.
For .net, the numbers stand at 14,750,674 and 32,440 (0.22%).
Verisign CEO Jim Bidzos told analysts last night that the data is being released to “increase transparency” into the company’s performance.
Many tools available for tracking registration numbers in TLDs are skewed slightly by the fact that they rely on publicly available zone file data, which does not count dark domains.
Registry reports containing more accurate data are released monthly by ICANN, but they’re always three months old.

ICANN to get $8 million more from new .com deal

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.