VeriSign .com Renewal Under Department of Justice Review
Pricing of .com domains gets U.S. government scrutiny as November 30th deadline looms.
VeriSign has been managing the .com domain registry since 1999. It's an agreement that has already been renewed once, back in 2006 and is set for renewal this year. While ICANN has already awarded the contract to VeriSign, the deal is now under review by the U.S Department of Justice.
Jim Bidzos, executive chairman, president and chief executive officer of VeriSign discussed the review during his company's third quarter 2012 earnings call. For VeriSign, it was another strong quarter with revenue reported at $224 million, for a 13 percent year-over-year gain. Net income grew to $78 million for the quarter, up from $59 million last year.
At the core of VeriSign's success is the .com registry business. At the end of the third quarter, there was a base of 105 million registered .com domain names and an additional 14.9 million .net domain names. Bidzos noted that the current domain name base is a 7.1 percent increase over the same period a year ago.
VeriSign operates the .com registry under an agreement that requires the approval of U.S. Department of Commerce. It's an agreement that was set for renewal by November 30th, but could now be delayed.
"As a result of communications beginning in October 2012 with the Commerce Department, we learned that the Commerce Department was conducting a review of pricing with the Department of Justice," Bidzos said during his company's earnings call.
He added that the review could extend beyond November 30, 2012, in which case a 6-month extension of the .com registry agreement would come into effect.
"We want to emphasize that nothing has happened that changes the risk of our running .com," Bidzos said. "We expect to continue to be the registry operator of .com. "
Bidzos emphasized that the discussions with the Commerce and Justice Departments relate to the pricing terms in the .com renewal agreement.
These discussions are ongoing and could extend beyond November 30. We will work diligently with them through the review process. Bidzos declined to provide specific details about the review process during the earnings call.
"But let me just reiterate that the status of our ability to operate .com is not an issue here," Bidzos said.
He added that it's also not uncommon for the U.S. Department of Justice to be involved in the renewal process either. The Justice Department also had its hands in the 2006 renewal process as well.
"The Commerce Department is the party with which VeriSign has entered into the Cooperative Agreement and the Commerce Department has the responsibility for review and the obligations to VeriSign to act in the public interest against the two standards in the agreement, Security and Stability and Registry Services," Bidzos said. "It consults with other government agencies."
Overall, Bidzos stress that security and stability are the primary goals and focus for VeriSign. He remarked that over the last few weeks, other Internet providers in the web and domain space have had outages and service disruptions.
"If that happened to .com, I think there would be a lot more tension, there'd be a lot more people affected, there would be a lot more economic loss," Bidzos said. "So I sort of like us as a model focused on doing one thing, which is providing absolutely secure and stable infrastructure because there is just too much that depends on it here."