Group outlines possible path to “.Com-petition”

American Economic Liberties Project says there are ways to pressure Verisign to lower .com prices.

Last month, American Economic Liberties Project sent a letter to the U.S. government asking it to halt the renewal of the Cooperative Agreement with Verisign (NASDAQ: VRSN) for running .com. It argued that Verisign has a monopoly that allows it to charge above-market prices for .com domains.

Verisign shot back by saying the National Telecommunications and Information Administration (NTIA) can’t renegotiate the contract without Verisign’s agreement, and if NTIA cancels the agreement, Verisign can continue to contract with ICANN to run .com.

This week, American Economic Liberties Project provided a possible roadmap for reducing .com prices.

The group reckons that the fair market cost for Verisign’s services are between $.87 and $4.37 per domain, well below the current price of $9.59 (increasing to $10.26 on September 1).

To get prices to more fairly reflect market rates, the group suggests several paths.

First, it recommends two ways the NTIA could resolve the issue.

One of these is to end its relationship with Verisign by not renewing the agreement. It states:

Ending NTIA’s relationship with Verisign would trigger renegotiation of the .com Registry Agreement with Verisign, which would have to take into account heightened antitrust scrutiny because Verisign and ICANN would no longer be able to invoke implicit government support or responsibility as a litigation shield.

The thinking here is that ICANN would be under pressure to not cave into Verisign and to rein in the prices Verisign can charge because of potential antitrust actions. (This seems risky to me; ICANN has repeatedly stated it doesn’t want to be involved with setting prices, and it seems unlikely to change the existing contract unless it faces significant government pressure. It had previously planned to allow higher price increases before the NTIA stepped in during the Obama administration.)

Another option is for the NTIA to pressure Verisign into amending the contract, perhaps changing it to cover demonstrated costs plus a margin. But with the NTIA’s deadline to send a non-renewal notice set for August 2, it’s unlikely this would happen during this contract cycle.

If the NTIA can’t or won’t act, American Economic Liberties Project lays out a case for antitrust action against Verisign.

The document contains a good recap of the history of Verisign, ICANN and the NTIA. It can be viewed in full here (PDF).