Internet and e-mail policy and practice

Is Verisign a monopoly? Does it matter? ICANN Senator Elizabeth Warren and Rep. Jerry Nadler recently wrote a latter complaining that VeriSign overcharges for for .com domains due to its market power and sent it to the Department of Justice and the National Telecommunications and Information Administration (NTIA.) While you can make a reasonable case that the claim is true, two more interesting questions are ``Why now?'' and ``Why bother?" The letter was reported in a story in Wired. Oddly, a short press release on Warren's web site links to the Wired story, Nadler's web site doesn't mention it yet, and I can't find a copy of the letter anywhere, just some short quotes in the Wired piece. To briefly summarize a lot of history, Verisign has been the sole registry for .com for thirty years. In the 1990s what was then called Network Solutions got a government contract to sell names in .com, .net, and .org. In the early 2000s, as ICANN was starting, the domain business was split into registries which sell names wholesale to registrars which sell them retail to anyone. There is one registry for each top level domain, and several thousand competing registrars that sell names from many registries. VeriSign spun off its registrar business which was still called Network Solutions, while keeping the registries for .com and .net. A separate deal around the same time transferred the .org registry to PIR, a subsidiary of the non-profit Internet Society. VeriSign has a cooperative agreement with NTIA which until 2018 set a cap on the price for .com. In 2018 it was amended with a complex formula that allows VeriSign to raise the price 7% per year in four years out of six. The wholesale price was $7.85 so now after four increases it's $10.26. This is the price that registrars pay for renewals; initial registrations can be and usually are discounted and each registrar can mark the price up or down as much as they want. There was a fair amount of grousing about this in 2018 since there was no cost justification for the increases, just vague assurances that it's OK because the market is now competitive. Hence the question, ``Why now?'' since there is nothing different now. As to whether VeriSign is a monopoly, well, they sure act like one. The .com registry has about 150 million names, which is over twice as large as all of the other "generic" (ICANN contracted) domains combined. A quick look at VeriSign's financial statements shows that they are fantastically profitable. Last year their revenue was $1.49 billion, of which $1.0 billion was profit, or about 67%, a fraction most companies can only dream of. These numbers suggest that VeriSign could cut the price in half and still make money. But that leads the the question ``Why bother?'' The $10.26 wholesale price for .com is in line with other top-level domains. It's about the same as PIR charges for .org, and less than what most of the new registries charge for new TLDs like .biz or .review. Moreover, if we imagined that the wholesale price of .com was cut in half, that's $5/yr which will make no difference to anyone except domain speculators. If you're setting up a web site you need hosting and site design and a lot of other services beyond the domain name. If the annual combined price dropped from, say, $110 to $105, so what? You can claim that it's not fair for VeriSign to extract all that money and you wouldn't be wrong, but the unfairness is spread pretty thin. We have recent experience of what happens when registries sell domains cheaply, and it's not pretty. New TLDs often have unrealistic ideas about how many names they would sell, so they panic and have a fire sale, offering lots of names very cheaply. Who wants to buy lots of cheap names? Criminals, that's who. There is a clear line showing that the lower the price, the more abuse a TLD has. At this point .com is in the middle of prices and its rate of abuse is in line with that. If a $5 price drop doubled the amount of domain abuse we all have to deal with, that would be a poor trade. Finally, what realistic remedies are there? There is no way to break up the .com registry since for straightforward technical reasons the names all have to be in a single database.* The simplest option would be to stop or roll back the price increases, but as described above, there's no reason to think that would have any practical benefits. Another might be to put the contract out for bid to see if someone else can do it, but that is very risky. No matter what you think of their business practices, VeriSign is technically very competent, and their registry has been running 100% of the time with no outages for decades. No other registry handles a TLD even half the size of .com, and even if you think someone else could probably do it, how much pain are you prepared to experience to find out? After decades of growth, the number of domains in .com peaked last year and is now slowly shrinking. This means that while .com is a cash cow, its growth prospects are nonexistent other than via price increases, which further limits interest from other potential operators. So in summary, yeah, VeriSign makes a lot of money for .com, way more than any costs could justify, but it's hard to see how that is significantly hurting its users, and harder to see what changes would be an improvement.  * - If anyone's contemplating a response containing the word "blockchain" please don't.   posted at: 20:10 :: permanent link to this entry :: 0 comments Stable link is https://jl.ly/ICANN/vermonop.html

Senator Elizabeth Warren and Rep. Jerry Nadler recently wrote a latter complaining that VeriSign overcharges for for .com domains due to its market power and sent it to the Department of Justice and the National Telecommunications and Information Administration (NTIA.) While you can make a reasonable case that the claim is true, two more interesting questions are ``Why now?'' and ``Why bother?"

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