Last month( On January 3, 2020, ), ICANN, the organization that oversees domain names, announced significant changes to the contract it has with Verisign, Inc. who operate the .COM top-level-domain (TLD).
ICANN made these changes in secret, without consulting or incorporating feedback from the ICANN community or Internet users. Although ICANN has a history of making similar deals behind closed doors, and also of ignoring unified opposition against such action, we are focused on leading the fight against price increases that will harm our customers (and the Internet as a whole). This is a crucial time to raise our voices given that .COM domains make up 40% of all registered domain names online.
What does this change mean?
Wholesale registries charge Namecheap a set fee per domain name per year. According to this new agreement, Verisign will be allowed to increase the wholesale price to registrars for .COM domains every year for 8 out of the next 10 years, and the increases don’t stop there.
This will mean that .COM wholesale domain prices can grow by more than 70% over and above current prices over the next decade. The contract also allows for other price increases, which could drive prices up further, ultimately making .COM domains less accessible and more expensive for everybody.
Why is ICANN doing this?
Alongside these contract changes, Verisign agreed to pay ICANN an additional $20 million dollars over five years to support ICANN's domain name system initiatives, without any clarity about how ICANN will spend the money, or who will ensure that the funds are properly spent on domain infrastructure.
These changes will have significant impact on the Internet for years to come, and only ICANN and Verisign have participated in this decision
There are four main concerns with ICANN’s decision:
1. Price Increases
Verisign will be allowed to increase the wholesale price to registrars for .COM domains by 7% each year in 2020, 2021, 2022, and 2023. After a two year “freeze”, Verisign can increase prices by 7% annually during 2026-2029, then another two year “freeze”. This cycle will continue, meaning that within 10 years, .COM domains could cost approximately 70% more than the current wholesale price of $7.85 — and the sky is the limit.
It is not clear how much of these price increases registrars will pass along to consumers, but it is likely that most of these increases will be paid by domain name registrants. The contract does allow for other price increases for certain extraordinary situations, so it is possible prices could increase more than anticipated.
2. ICANN Will Receive an Extra $20 Million
With the contract changes, Verisign agreed to pay ICANN an additional $20 million dollars over five years to support ICANN’s initiatives regarding the security and stability of the domain name system. There is no explanation why Verisign did this, how ICANN will spend the money, or who will ensure that the funds are properly spent.
3. Verisign Can Operate as a Domain Registrar
ICANN also had rules that the operator of a TLD could not operate a domain name registrar. Although in 2012 ICANN allowed operators of new gTLDs to have domain name registrars, it did not apply to Verisign. The new contract will allow Verisign to operate its own registrar, except for selling .COM domain names itself. To circumvent this, it is also possible that Verisign could act as a reseller of .COM domains, through another registrar.
This result is that the company that controls almost 80% of the registrar pricing for domain names will compete directly with all domain registrars, maximizing its control of domain name pricing to the detriment of other competing registrars. While this might result in lower prices to consumers, fewer registrars will harm competition, choice, and domain name services.
Verisign’s registrar could also use its dominant position to charge higher prices to consumers, while at the same time raising registrar prices.