ICANN board approves settlement, price hikes

Deal extends VeriSign's lucrative monopoly over .com domain, with price hikes. But feds could still block it.

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
In a rare show of internal discord, the group that sets domain name regulation has approved a controversial proposal extending VeriSign's lucrative .com monopoly and allowing for price increases for those domains.

The Internet Corporation for Assigned Names and Numbers (ICANN) voted 9-5 on Tuesday in favor of a settlement agreement that grants VeriSign the right to raise fees on .com domains by 7 percent annually.

The settlement, which arose out of a lawsuit filed by VeriSign against ICANN after the Site Finder flap in 2003, will be lucrative for both organizations. Based on the 48.1 million .com domains currently active at $6 per year, VeriSign is guaranteed at least $288.6 million in annual revenue--with price hikes at a rate that far outpaces inflation.

The deal is not final yet. It has to be approved by the U.S. Commerce Department, and some members of Congress are already urging that it be rejected. Rep. Rick Boucher, a Virginia Democrat, said in a letter to the Bush administration last month that the proposal has "serious anti-competitive implications."

VeriSign said in a statement that the .com registry agreement is similar to one already approved last year relating to .net. "VeriSign is committed to continuing to build and invest in the Internet infrastructure so it meets the growing needs of Internet users and operators," the statement said.

It's also drawing fire from the registrars that sell .com domains, who allege that ICANN and VeriSign get to cash in--at the general public's expense. (The settlement includes VeriSign's agreement to hand over to ICANN an annual sum of $6 million to $12 million.)

The Coalition for ICANN Transparency (CFIT), a group set up after details of the settlement became public last fall, blasted Tuesday's vote. "Voting in favor of a bad deal doesn't change the deal's dynamics. It just confirms ICANN's refusal to listen to legitimate criticism coming from every corner of the Internet community," said John Berard, the coalition's spokesman.

CFIT has sued VeriSign and ICANN. In court documents filed last month, the group alleges that the .com deal represents an "unlawful agreement to establish a permanent monopoly" in violation of federal antitrust and California unfair competition laws.

ICANN has said that it needed to accept the agreement to settle the lawsuit with VeriSign. "VeriSign has advised ICANN that this proposal represents its last, best offer to settle the pending litigation," ICANN said in a statement in January.

A minor change from an earlier version of the settlement agreement permits the 7 percent price hikes for only four years of the agreement's six-year term. VeriSign would have a presumptive right to have its monopoly renewed after the agreement expires in 2012.

Those voting in favor of the deal included ICANN Chairman Vint Cerf, who is Google's chief Internet evangelist; ICANN Vice Chairman Alejandro Pisanty; and ICANN President Paul Twomey. Voting against it were Raimundo Beca, Susan Crawford, Joichi Ito, Njeri Rionge and Peter Thrush. There was one abstention, by Michael Palage, an attorney in the U.S.