Registrars increase alarm over proposal for large .com payment hikes

Last week, ICANN announced that Verisign, the private company that manages the .com domain, could increase prices by more than 70 percent in the next ten years. Domain registrars – companies that help register domains and have to pass these escalating fees on – are not pleased.

"ICANN and Verisign have made these changes in secret without receiving or involving feedback from the ICANN community or Internet users," registrar Namecheap wrote in a blog post. "Namecheap will continue to fight price increases that will harm our customers and the Internet as a whole."

On Sunday my colleague from Ars Technica, Kate Cox, received a notification from her registrar Dynadot warning that "Price increases at registration level unfortunately lead to price increases at Dynadot".

To register a .com domain on behalf of a customer, a company like Namecheap or Dynadot must pay Verisign a fee of $ 7.85. Registrars typically pay a few dollars in addition to this fee, but fierce competition between registrars limits their ability to raise prices. But Verisign itself has no competitors. If you want to register a .com address, you must do business with Verisign.

To prevent Verisign from abusing this monopoly, ICANN limits the fees that Verisign can charge.

With the new contract, Verisign can increase the current price of $ 7.85 by 7 percent per year over the next four years – much faster than expected during this period. Verisign would then have to keep prices constant for two years before another four-year cycle could begin with annual price increases of 7 percent. Add it all up and the price of domain registration could go up 70 percent to $ 13.49 in 2030. If inflation stays near the Federal Reserve's 2 percent target during this period, Verisign's inflation-adjusted earnings will increase by about $ 4 per domain per year.

This would be a great stroke of luck for Verisign, as Namecheap has registered over 140 million .com domain names. So Verisign would earn more than $ 500 million in additional revenue each year from operating the .com registry.

The price increases appear to be part of a wider ICANN domain to allow higher registration fees for the domain name system. Last year, ICANN had a backlash after removing price caps for the .org domain, which is managed by a non-profit organization called Public Interest Registry. During a public comment phase on the change, more than 3,200 people spoke out against the change, with only six endorsing it.

ICANN and the Internet Society faced an even bigger backlash a few months later when PIR's parent company, the Internet Society, announced that it would sell PIR to a private equity firm with close relationships with former ICANN representatives. Despite widespread public outrage, the Internet Society pushed the proposal forward.

While ICANN has removed price caps for .org and most other top-level domains, it currently doesn't have the ability to do so for .com. This is because ICANN and Verisign take control of the .com domain themselves through the US Department of Commerce. In fact, ICANN argues that it is only in line with the wishes of the Department of Commerce, which authorized ICANN to raise price ceilings by 7 percent annually in 2018. ICANN would need approval from the Department of Commerce to introduce larger increases than those that have already been announced.