ICANN Allows .COM Price Increases, Gets More Money
On January 3, 2020, ICANN announced significant changes to the contract it has with Verisign, Inc. to operate the top-level domain .COM.
ICANN and Verisign made these changes in secret, without consulting or incorporating feedback from the ICANN community or Internet users.
Although ICANN has a history of making similar deals behind closed doors, and also of ignoring unified opposition against such action, Namecheap will continue to lead the fight against price increases that will harm our customers and the Internet as a whole. (For more information about Namecheap’s efforts to maintain domain name price controls, visit pricecaps.org.)
The changes to the .COM agreement will have a much bigger impact on the Internet than the previous action for .ORG, .INFO, and .BIZ domains, due to the dominance of .COM. There are 359.8 million total domain names, of which 144 million are .COM — that’s 40% of all domain names. With 161.8 million country-specific TLDs (ccTLDs), there are 198 million generic TLDs (gTLDs). That means that .COM makes up 73% of all gTLD domain names.
ICANN was created in part to introduce competition between domain name registrars, but now ICANN itself is at the heart of the problem, without considering any input from Internet users on these critical decisions.
There are four main concerns with ICANN’s decision:
1. Price Increases
Verisign will be allowed to increase the wholesale price to registrars for .COM domains by 7% each year in 2020, 2021, 2022, and 2023. After a two year “freeze”, Verisign can increase prices by 7% annually during 2026-2029, then another two year “freeze”. This cycle will continue, meaning that within 10 years, .COM domains could cost approximately 70% more than the current wholesale price of $7.85 — and the sky is the limit.
It is not clear how much of these price increases registrars will pass along to consumers, but it is likely that most of these increases will be paid by domain name registrants. The contract does allow for other price increases for certain extraordinary situations, so it is possible prices could increase more than anticipated.
2. ICANN Will Receive an Extra $20 Million
With the contract changes, Verisign agreed to pay ICANN an additional $20 million dollars over five years to support ICANN’s initiatives regarding the security and stability of the domain name system. There is no explanation why Verisign did this, how ICANN will spend the money, or who will ensure that the funds are properly spent.
3. Verisign Can Operate as a Domain Registrar
ICANN also had rules that the operator of a TLD could not operate a domain name registrar. Although in 2012 ICANN allowed operators of new gTLDs to have domain name registrars, it did not apply to Verisign. The new contract will allow Verisign to operate its own registrar, except for selling .COM domain names itself. To circumvent this, it is also possible that Verisign could act as a reseller of .COM domains, through another registrar.
This result is that the company that controls almost 80% of the registrar pricing for domain names will compete directly with all domain registrars, maximizing its control of domain name pricing to the detriment of other competing registrars. While this might result in lower prices to consumers, fewer registrars will harm competition, choice, and domain name services.
Verisign’s registrar could also use its dominant position to charge higher prices to consumers, while at the same time raising registrar prices.
4. ICANN Ignored Previous Comments
As detailed on Standing Up to ICANN to Keep Domain Prices in Check and pricecaps.org, over 3,500 comments were submitted in support of price controls for the .ORG, .INFO, and .BIZ TLDs. Only six comments supported removing price controls. ICANN discounted the comments that were in favor of maintaining price caps. A number of the comments were submitted using an online tool, which caused the comments to be discounted as “spam” by the ICANN Ombudsman.
ICANN removed the price caps, primarily relying upon a biased preliminary analysis from 2009 by an economics professor that did not reference any data.
What Can Be Done About This?
These changes will have a significant impact on the Internet for years to come, and only ICANN and Verisign have participated in this decision. Here is what can be done to stop these harmful changes:
• Let ICANN know how you feel
The Public Comment period is open through February 14, 2020. Submit your own personalized comment using ICANN’s form at https://www.icann.org/public-comments/com-amendment-3-2020-01-03-en/mail_form. You can use the points in this post, but comments will have more impact if they are personalized and based upon your own experience. Everyone on the Internet will be touched by these changes, so together we must tell ICANN how we do not want this.
• Namecheap’s efforts
Namecheap will continue to lead this fight. We are preparing our own comment and working with other domain name registrars to provide additional feedback. The consequences of this decision will impact the entire Internet for many years, and registrars need to ensure that our customers are not harmed by the unilateral decisions made by ICANN staff.
• Support other ICANN community efforts
If you are involved in the ICANN community, make sure your group or organization submits its own comment to ICANN. Every comment helps, and if ICANN sees near-universal opposition, it will be difficult to finalize these changes.