ICANN has sought public input on the proposed renewal of the registry agreement for .NET. The ICA submitted a comment that raised concerns about the proposed substantial service fees that Verisign would be charging and highlighted the importance of implementing a conditional competitive bidding process to determine appropriate service fee levels like has been done by other registries, including ICANN itself. The ICA presented eight recommendations in total. You can see the full submission on the Public Comment section of ICANN.com.
Below is a short summary of the ICA’s submission on the issue of service fee levels:
Verisign currently receives an estimated $130,944,000.00 in .net “Service Fees”, per year – an amount which approaches ICANN’s entire 2023 operational budget of $148 million. Based upon current registration volumes, by the end of the proposed six-year term Verisign will receive $17.56 per .net domain name per year, which amounts to an estimated $231,792,000 per year in Verisign’s portion of the “Service Fees” and an estimated Billion Dollars in the aggregate over the Term of the 6-year Agreement.
Although the expiring Agreement provides a presumptive right of renewal, Sections 4.2 and 4.3 makes it clear that the parties may negotiate the terms of a renewed Agreement and those terms include Service Fees.
ICANN should follow the common practice of identifying the best combination of quality services and low prices available in the marketplace by seeking conditional bids for the .net registry Agreement. This would enable ICANN to identify the lowest Service Fees that a qualified competitor to Verisign would be prepared to accept.
With this crucial data in hand, ICANN could then undertake meaningful negotiations of Service Fee terms with Verisign. If Verisign then declined to renew the Agreement with the competitively identified Service Fees, the Agreement would expire and ICANN could then award the contract to the successful conditional bidder.
It is irresponsible for ICANN to agree to any amount of Service Fees, let alone perpetually increasing Service Fees, without first determining the appropriate level via a competitive conditional bidding procedure. Competitive service fees are likely in $1 – $3 per domain name range, rather than the $9.92 plus 10% increase per year, compounded, as proposed. The US DOJ already advised ICANN that it should be requiring competitive bidding prior to renewing registry agreements. An economic study is also crucial.
You can view the entire comment here.