Rick White, a member of VeriSign’s Internet Advisory Board, has published an op-ed about the .com price hike agreement with ICANN on CNET.
White suggests that increasing security risks demand more investment by VeriSign in the .com infrastructure, hence the opportunity to jack up registry prices by about a third:
For example, security giant Symantec reports that denial-of-service attacks are up 679 percent in the past year. These attacks are increasingly hindering e-commerce, and the effects are frightening. More than 10,000 Web servers were used to force an online DVD seller out of business for two weeks. And 120,000 machines were used to take down an online payment processor just last month.
Cute approach, Mr. White. Then why not tie the .com price increases to your actual investment in infrastructure over the next few years, not an unjustified increase? I’d like to focus on another statement you make:
“Usage of .com has quadrupled over the last five years alone.”
That means VeriSign’s revenue to fight this security risk has skyrocketed as more .coms have been registered! And surely there are some economies of scale running a registry. There’s a large infrastructure cost that goes up only slighly with each additional domain.
White did make a good point about the changes in .net registry prices forced upon VeriSign in competitive bidding:
Operational security on the Internet isn’t free. Retail sellers of domain names understandably are driven by a desire to lower the “wholesale” cost of domain names so that they can be as profitable as possible. But they don’t have to worry about making sure that the Internet stays up and running. And history suggests that consumer protection isn’t their primary motivation. When they forced a reduction in wholesale prices for the .net domain last year, none of the eight major registrars passed the $10 million in savings on to their customers. It went to their bottom line.
Only some of the smaller registrars passed this cost reduction on the the consumer. But that was with a wholesale price reduction– not an increase. We know for a fact that registrars will have to pass the .com hike to consumers. Many major registrars make less than $2 profit on .com registrations. Although some are willing to take a loss, they aren’t willing to suck up another $2. 1&1 Internet, for example, sells domains for $5.99. They lose $.26 on each domain sold (VeriSign charges a $6 fee, ICANN tacks on $.25) in hard costs alone. If VeriSign’s price goes up $2 you can expect an across the board price increase from discount registrars.
The only way to justify the price increase is to tie it to actual investments in the infrastructure. I worked for a “psuedo-monopoly” in the past and witnessed its spin machine talk about how it was just out to protect the consumer and the infrastructure. C’mon, we all know what the real point is. The point is to boost profits.
The best thing VeriSign can do is admit that’s the goal instead of trying to insult our intelligence.
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