The Department of Justice in a letter sent on August 31stto Senator Cruz and his colleagues in response to their August 12th letter inquiring on antitrust and Verisign after the transition and .Com RA extension makes clear that NTIA, in consultation with DOJ, retains full authority to extend the Cooperative Agreement and the .Com price freeze through 2024.
“We note that the current extension proposal contemplated by ICANN and Verisign does not change the price cap contained in the 2012 .com Registry Agreement, which will remain in effect through November 30, 2018. Nor does the current extension proposal alter the price cap in Amendment 32 of the Cooperative Agreement.
Moreover, if NTIA were to approve an extension of the .com Registry Agreement, it would have the right in its sole discretion to extend the term of the Cooperative Agreement with the current price cap in place until 2024 at any time prior to November 30, 2018, the date on which the Cooperative Agreement is currently scheduled to expire.
If this occurs, the $7.85 fee cap would be extended another six years to 2024.”
Considering that the transition is implemented, the pricing may be fixed…However, the larger issue regarding Freedom of Speech still looms…In an ironic twist, countries with current censorship programs will soon have a larger voice…..
Beautiful, why would I pay $39 to register .crap domains, .com at $7.85 all day long till 2024, donuts is already upping prices in October for crap extensions
Aaron
Right and to be clear the only fixed pricing will be .com
.net already has a 7% rate increase in every 4 of 6 years; .org .info .biz all have raised rates and the new G’s can do pretty much whatever they want as they can now
I don’t think this letter says the pricing will stay at 7.85 until 2024. It just says that the government *could* force Verisign to keep the price at 7.85.
Andrew
Isn’t that the same thing?
Verisign can voluntarily keep it at $7.85 or the DOJ could force them to.
At $7.85 and a 61%+ profit margin, unless .com registrations drop substantially (which they have not yet in any year) I think Verisign will do just fine, plus they can raise rates on .net which has rebounded to be close to 16M registrations and they probably have .web which they can price anyway they want (plus .tv)
Mike, I understand your point. But, unless the gov’t receive pressure from congress and/or citizens, they will not get involved. Verisign will make the argument that they need more revenue to protect the integrity of the .com registry. They will scare people so they can get the price increases through. The price increases will happen. The question is – by how much.
good news for all of us
good news! the fact that the doj wants to set .com and doesn’t care about pricing of any other tlds says something in my opinion..
good observation.
says everything (not something) cmac
$7.85 or less…
Domo
No not less
outstanding news.
In the most recent Q2 2016 earnings call, VeriSign announced highest ever gross margins and operating margins of 83.6% and 65.4% respectively.
Substantially, all of VeriSign’s revenues and income are generated from the operation of the .COM and .NET namespace.
When you analyze on a per domain basis, the numbers are staggering. VeriSign charges $7.85 for each .COM registration and renewal. As a result, VeriSign realizes:
– Gross Margins of $6.56 per .COM domain name
– Operating Margins of $5.13 per .COM domain name
VeriSign will generate almost $700 million in free cash flow in 2016. If the proposed early RA extension between ICANN and VeriSign is approved through 2024, this means VeriSign will generate at minimum $6 BILLION in free cash flow from the no-bid contract.
Why is this happening?
– Economies of scale (base of .COM domains is now up to 127 million domains) – but it does not cost any more money to operate the registry
– Automatic Built-in Renewal rate of 74% (94 million domains will automatically renew without any effort and a simple database command)
– Decline in cost of technology, computing power, infrastructure, hardware, bandwidth, etc.
– VeriSign spending less on marketing and R&D (2015 was the lowest dollar amount spent in a single year)
.COM pricing made sense 10-years ago, but it is now 2016 and it is simply not right that one company is able to generate so much profits from a no-bid contract. Do you really want to enrich VeriSign and its shareholders with so much more profits and free cash flow over the next 8 years?
Bottom line – VeriSign is not investing into its infrastructure anymore and putting all of its cash into stock repurchases. VeriSign repurchased $3.867 billion in stock over the past 5 years. VeriSign also remains very well capitalized with $2.0 billion in cash on its balance sheet. Why should all of this money from the .COM contract be funneled into VeriSign stock buybacks, which only benefits VeriSign?
Does the DOJ truly understand what is happening with all of this money?
Why is the NTIA and Lawrence Strickling not forcing the reduction of .COM prices?
“An Internet Giveaway to the U.N.
If the U.S. abdicates internet stewardship, the United Nations might take control.”
wsj . com/articles/an-internet-giveaway-to-the-u-n-1472421165
>”Congress still has time to extend its ban on the Obama administration giving up protection of the internet. Icann has given it every reason to do so.”
Domainer
I’m just telling you what the DOJ is saying.
I’m a believer that Verisign will wind up with a rate increase at some point during the next contract
>I’m a believer that Verisign will wind up with a rate increase at some point during the next contract
Agreed.
I would not be surprised if the cap was removed entirely. Anybody concerned about cap removal can pay their “$78.50” before it goes into effect and then walk away and forget about it for 10 years. Nobody would ever be forced to pay the fee increase for 10 years.
.com to stay the same or the gov will step in. This is probably why verisign grabbed the .web tld. So they have control of .com and can now flex their muscle on .web. How long before we see the new tlds dropping their new tlds. Or we start seeing mergers at the low end of the market?
Charles
You are right you would have the right/time to renew all of your .com’s for 10 years out which is fine for most, but if you have a big portfolio, take my former 70K domains that would cost me 5.7 million in cash to do that.
Of course there are many that owns more domains Mike Mann at last count owned 300K domains so he would have to folk over $25 million + in one shot for 10 year renewals, The Hugedomains.com guys have at least report close to 1.5 million domains, so over $100 Million cash
That is a lot of cash.
Donald
Verisign has a presumptive renewal contract at the $7.85 meaning the only way the can lose the contract with that pricing is if they screw up the operation of the registry which has had a 100% uptime since forever.
The now got the .gov contract too.
The deal was done many years ago, as you state they have lots of cash and would fight whoever they needed to, to enforce the contract they have that commerce long ago signed off on