Senators question .com price increases

At Senate hearing, politicians ask about VeriSign's guaranteed price increases for .com, call for .xxx domain.

Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Declan McCullagh
3 min read
A long-running dispute over the cost of domain names and VeriSign's lucrative .com monopoly returned to Capitol Hill on Wednesday, with several U.S. senators questioning the current arrangement as uncompetitive.

Sen. Gordon Smith, an Oregon Republican, asked why VeriSign should have what critics have called a guaranteed perpetual income stream from .com domain registrations. The company currently receives $6 per domain, or about $323.4 million a year, from .com fees alone.

In March, the Internet Corporation for Assigned Names and Numbers, or ICANN, granted VeriSign the right to raise prices it charges registrars like GoDaddy and TuCows for .com domains by 7 percent annually. A coalition of registrars has filed a federal lawsuit to block the deal.

Although Wednesday's hearing was titled "Internet Governance: The Future of ICANN," it provided an opportunity to air general grievances about the way the domain name system works, including domain name squatters and VeriSign's control of .com.

Christine Jones, general counsel to registrar GoDaddy, testified that after the contract to run .net was put up for an open bidding process, the price registrars paid for .net domains fell. "VeriSign gets this huge windfall if this agreement is renewed," Jones said. "There is simply no reason that we can see to build in a price increase."

VeriSign's Ken Silva, its chief security officer, replied that .net and .com were hugely different creatures and could not be compared directly. "It's a different animal," Silva said of .net. "It's a much smaller zone." Silva said that the fees will go to provide a high level of security and reliability for .com.

Another topic that arose in the hearing convened by a Senate Commerce subcommittee is an agreement between the federal government and ICANN, which is scheduled to expire on Sept. 30. The agreement outlines ICANN's responsibilities dealing with domain names. (A similar agreement dealing with Internet addresses was renewed last month. )

"The short answer is that it should be extended," said John Kneuer, an acting assistant secretary at the U.S. Department of Commerce, adding that negotiations are under way to do just that. This is consistent with what the Bush administration has said in the past: that it will not hand over its unique influence over Internet governance to any other organization.

Other members of a Senate Commerce subcommittee suggested that ICANN should have approved an adult domain called .xxx instead of rejecting it. That domain could be used to segregate pornographers, they said.

"I don't believe we ever established a formal position one way or another," Kneuer said. The Bush administration last year asked ICANN to halt the process, citing "e-mails from individuals expressing concern about the impact of pornography on families and children."

ICANN President Paul Twomey said his group had received more than 100,000 complaints about .xxx from groups such as the American Family Association. ICANN's rejection of .xxx, Twomey said, had "a lot to do with the nature of the contractual language put before us by the applicant and the timing of the request" rather than an objection in principle.

VeriSign's guaranteed price increases came about as the result of a lawsuit filed by VeriSign against ICANN after the Site Finder flap in 2003, during which ICANN ordered VeriSign to halt a service that redirected expired or nonexistent .com and .net domains to the company's Web site. The settlement permits the 7 percent price increases for any four years of the agreement's six-year term. In addition, VeriSign would have a presumptive right to have its monopoly renewed after the agreement expires in 2012.