DomainCocoon’s Comments on the proposed renewal of the .COM Registry contract with VeriSign

Below you will find a copy of the renewal of the dot-com registry agreement with VeriSign as proposed by ICANN. You can also find our submission on the ICANN website.

The deadline for submitting comments is at 23:59 UTC today. The contract proposes an renewal of the agreement with VeriSign (as opposed to opening the contract to bidding) and will allow VeriSign to continue to increase prices by 7% for four out of six years.

Summary:

DomainCocoon opposes the renewal of the current dot-com contract with VeriSign under the terms proposed by ICANN. We believe the contract should be open to both public scrutiny and bidding from interested parties.

Background:

In our daily work we interact with VeriSign as well as with many ICANN-accredited registrars and their interfaces. We always have valued the level of support VeriSign provides to its registrars and have been impressed with the stability of the services it offers.

That being said, we’re surprised to learn that ICANN proposes to re-assign the COM operational contract to VeriSign without further review of any potential competitive bids. This is especially astonishing when bearing in mind that intricate details of the current version of the contract are merely the result of a lawsuit settlement between ICANN and VeriSign. The settlement in question was forged without public input from community and stakeholders, and without much information given to the public at large. The main concern of the contract, though not the only one, is a provision which permits a price increase of 7% for four out of six years.

It seems unrealistic for this price increase to be necessary, let alone to open a venue for continued increases in the first place. Since the cost of technology bandwidth and other related factors have significantly come down over the years and will most likely continue to reduce, the provision mentioned is anti-intuitive to the idea of spreading technology and nurturing participation among Internet users.

Especially in light of the much lower registration prices for .NET names, for which VeriSign operates a similar Registry infrastructure, the cost on a per domain name basis should be lower for the .COM registry operation. This is mainly due to the higher volume involved in .COM. Consequently, the cost should decrease with the larger .COM transaction volume, not increase.

Thank you for your consideration.

Frank Michlick,
Consultant/Founder for DomainCocoon Inc.

DomainCocoon is a consultant to registrars, resellers and hosting companies. Amongst other services we currently help to manage three active ICANN accredited registrars that also offer registration services for COM/NET domains and others. Since our company also holds a portfolio of about 800 domain names, we also see ourselves on the commercial registrant side.

Can becoming an ICANN accredited Registrar save you money?

[Last Updated on Oct 27th, 2013]

Since many companies often mostly concentrate on the perceived cost savings of becoming an ICANN accredited registrar, we felt it would be a good idea to summarize the actual cost of maintaining an ICANN accredited registrar.

For smaller domain portfolio holders, this may actually not hold true – becoming an ICANN accredited registrar may initially increase the cost of holding the domains. However there are other advantages that should be taken into consideration, such as the improved security & control for your premium domain holdings held with your own registrar and even the right to participate a little more in ICANN politics.

One time fees due at the time of application

  • $3,500.00 USD non-refundable application fee (not considered in the financial exercise below)

Quarterly/Monthly Fees & Dues

  • Variable ICANN Fee, billed quarterly as set in the ICANN budget and divided by the number of registrars. For smaller registrars this fee usually ranges between $800 USD and $1,200.00 USD per quarter.
  • Fixed annual accreditation fee, $4,000.00 USD. These fees are first invoiced after your new registrar has become accredited.

Ongoing Cost

  • Registry Registration Fees per Domain Name Year (currently $7.85 for .COM)
  • Per Domain Name Year (registration, renewal, transfer) ICANN Fee (currently $0.18)

Other Considerations

  • ICANN requires the applicant to provide proof of at least $70,000.00 USD in working capital. (This amount does not need to be transferred to ICANN.)
  • ICANN required Commercial General Liability Insurance coverage of at least $500,000.
  • The individual registries may require additional pre-paid deposits and proof of available working capital.
  • The cost of licensing and running a registrar system.

In other words, your annual fees for maintaining most basic accreditation for just the COM gTLD are as follows:

  • $4,000 annual accreditation fee
  • $1,000 * 4 quarterly fee (mid-low range assumed)
  • ca. $1,000 commercial liability insurance (can be as low as $500)
  • Total $9,000.00 fixed cost per year

The base cost for a .COM domain name would be $7.85 + $0.18 ICANN fee, $8.03. Let’s assume that your current registrar charges you $9.00 per domain name year (including all fees), a difference of $0.97 of your base price. In order to get to the same price, you will have to process at least 9,279 (about $9,000 annual cost divided by $0.97) domain name years through your registrar to match the price of $9.00.

Please note that the actual number can be even higher, since this calculation does not include the cost of running a technology solution for an accredited registrar.