Well, that’s an interesting argument.
ICANN has responded to a letter (pdf) Internet Commerce Association sent to it regarding the renewal of the .net contract.
The organization recently renewed its contract with Verisign to operate .net, and continued to grant a maximum 10% annual increase in the wholesale price.
ICANN put the .net contract out to bid in 2005, resulting in a significant reduction in wholesale fees for the domain.
In its response to ICA (pdf), ICANN wrote:
Regarding your request to put the .NET TLD out for bid, there is no basis to do so. All registry agreements include the presumptive renewal provision, which promotes stability and investment in TLDs. If ICANN were to put every TLD out for bid every renewal cycle to give it to the lowest bidder there would be no incentive for registry operators to invest in long-term stability and growth of the TLD(s) they operate. Verisign has demonstrated this stability and investment over the past 25 years, maintaining security and continuity without disruption and continuing to invest in the TLD’s operations.
The real risk in repeatedly putting TLDs out for bid is to the Internet users, as bidding registry operators might prioritize cost-cutting over investing in the TLDs long-term stability and reputation. It is important to remember that the price of a domain registration is just a fraction of the total investment made by registrants in building and maintaining their websites, marketing, and communicating around their names. Therefore, incentivizing security, stability, and reliability in TLD operations, such as the presumptive renewal provision, is essential for the well-being of users and the integrity of the TLD.
Nobody is asking ICANN to put all TLD contracts out to bid. For better or worse, new TLDs are a different animal than legacy domains like .net.
And yes, if price were the only thing considered, it would put internet users at risk. But putting the .net contract out to bid in 2005, which resulted in significant discounts to domain registrants, certainly didn’t put internet users at risk.