ICANN, VeriSign Reach Deal on Domain-Name Prices

NEW YORK – VeriSign Inc. must meet certain conditions in order to fully raise fees for ".com" domain names under a new tentative settlement reached with the Internet's main oversight agency.

The new deal also would prevent VeriSign from ultimately passing on to domain name holders separate surcharges that help fund the agency, the Internet Corporation for Assigned Names and Numbers, or ICANN.

The revised accord would end a longstanding legal dispute between the two powerhouses behind the computer servers that, as the Internet's core address books, help people find Web sites and send e-mail.

The new deal follows months of public input and, ICANN general counsel John Jeffrey said Monday, requires final approval by the boards of both ICANN and VeriSign after another public-comment period.

In a statement, VeriSign called it "the best efforts of both VeriSign and ICANN to resolve differences that have been present for several years."

If approved, both sides would drop lawsuits filed against each other over, among other things, the introduction by VeriSign of a controversial search service called Site Finder.

The most direct change for Internet users involves domain name fees.

Currently, VeriSign charges domain name resellers, called registrars, $6 per ".com" name; registrars can then charge domain name buyers whatever they like, incorporating that $6 annual fee into the basic price.

If the deal is approved, VeriSign would be allowed to raise that fee, which registrars could then pass along to customers.

The new settlement would limit those increases.

In any two of the next six years, VeriSign could raise fees by up to 7 percent a year only in response to a security threat or to comply with an ICANN mandate.

But that leaves four years in which Verisign could raise rates by 7 percent annually without having to justify the increases, objects Network Solutions Inc., a registrar that VeriSign sold in 2003.

With more than 40 million ".com" names in use, a 7 percent increase could generate as much as $17 million for VeriSign in the first year alone.

The old deal, reached in October, would have allowed VeriSign to raise the fees every year without conditions.

Network Solutions and other critics also complained that VeriSign still would get first rights to a renewal in 2012, thwarting any hopes competitors had for open bidding.

But Network Solutions did applaud ICANN for prohibiting VeriSign from passing along a separate surcharge for ".com" names.

Under the old settlement, VeriSign would have collected for ICANN up to 50 cents per ".com" name.

Now the company must pay ICANN a lump sum on its own — $6 million in the first year, increasing to $12 million in 2009.

The new settlement also makes clear that ICANN isn't immediately approving Site Finder, which VeriSign introduced in late 2003 to help Internet users find Web sites when they mistype addresses.

Following complaints that Site Finder broke some Internet tools like spam filters and gave VeriSign an unfair competitive advantage in search, the company suspended the service.

Verisign subsequently sued ICANN, complaining that the agency was making it difficult for the company to create new businesses. ICANN countersued.

With the settlement, changed little in the revision, ICANN would create procedures and deadlines to more quickly review any new services VeriSign might introduce.

The new deal also adds performance benchmarks and privacy protections.

VeriSign still faces two lawsuits over the proposed settlement, and the plaintiff in one of them, calling itself the Coalition for ICANN Transparency, said the new terms were inadequate. ICANN also is a defendant in the CFIT lawsuit.

"It's pretty clear that VeriSign and ICANN are aware of the areas that are most objected to by the Internet community, but I do think that the revision posted offers change in name only," said John Berard, a spokesman for the group.