Commerce, Justice reviewing .com contract

The Commerce and Justice departments are scrutinizing Verisign's bid for a six-year renewal of its contract to continue running the .com registry, the Internet's most popular generic top-level domain name.

Verisign said late last week in releasing its latest earnings results that the department may not finish its evaluation before the company's current contract expires on Nov. 30. Verisign said Commerce informed it earlier this month that both Commerce and the Justice Department are examining the agreement's "pricing terms." If Commerce doesn't approve the contract before it expires, Verisign's current contract will be extended for six months, Verisign President and CEO Jim Bidzos said during an earnings call last week.

Despite this, Bidzos said he was confident the company's contract will get renewed. The Internet Corporation for Assigned Names and Numbers, the nonprofit group that manages the Internet's domain-name system, in June approved Verisign's contract to continue operating the .com registry, which is the database of all the second-level domains that have been registered under the top-level domain ".com," such as nationaljournal.com.

"We want to emphasize that nothing has happened that changes the risk of our running .com," Bidzos said. "We expect to continue to be the registry operator of .com. Our record on security and stability has been acknowledged by the Commerce Department."

The proposed contract renewal would maintain the current pricing structure, which allows Verisign to increase prices four times during the six-year contract by as much as 7 percent each time. The company, which also manages the .net registry, receives $7.85 for every domain name that is registered in .com by registrars, which are companies like Go Daddy that sell second-level domain name registrations to the public.

Neither the Commerce Department nor Verisign would give details on what pricing issues are being examined. "Verisign's .com Registry Agreement renewal is currently undergoing review by the Department of Commerce as required by the cooperative agreement between Verisign and the department," a spokeswoman for the Commerce Department's National Telecommunication and Information Administration said on Monday.

But industry watchers said that while the contract could undergo further changes, Verisign will likely continue to run .com.

"It is highly unlikely that the contract would be put out for competitive re-bid, as this would open up the possibility of a non-U.S. company receiving the registry contract and could well send Verisign hurtling toward bankruptcy as it has sold off other parts of its business over the past few years and is now focused almost exclusively on registry operations," Philip Corwin, counsel for the Internet Commerce Association, wrote in ablog post on Monday. His group represents domain-name investors, website developers, and others. "Most likely are constraints on Verisign's pricing flexibility, which could range from reducing the 7 percent limit to something less, reducing the number of times that prices can be raised, or even requiring Verisign to justify any future proposed increases to the DOJ before implementing them."

If changes are made to the contract, ICANN would have to put the revised contract up for public comment, he added.

Verisign has been operating the .com registry since 2000 when it bought Network Solutions, which was given the first contract ever in 1993 to operate the .com registry and to provide second-level domain-name registrations to the public. Verisign sold off its retail registrar operations in 2003 but kept the .com and .net registry business.

While Verisign has a wide swath of the domain-name market with its operation of the .com and .net registries, that business will soon face new competition. ICANN is expected to approve hundreds of new generic top-level domain names over the next few years to compete with .com, .net, and the 20 other existing generic top-level domains.

(Image via Pavel Ignatov/Shutterstock.com)