Verisign is negotiating with ICANN to bake price increases into current .com registry agreement.

.Com registry Verisign (NASDAQ: VRSN) has begun negotiations with ICANN to add price increases to its current contract to run .com domain names.

Verisign CEO James Bidzos discussed the updated Cooperative Agreement with the U.S. Government and how it applies to its contract to operate .com on the company’s earnings conference call yesterday.

The agreement allows for price increases of 7% per year in the last four years of each six-year contract extension. Also, the Cooperative Agreement does not require Verisign to get approval for future price increases as long as they are limited to the 7% per year/last four years agreed to in the current Cooperative Agreement, he said. The agreement can only be modified by mutual consent of both the U.S. government and Verisign, which suggests that future administrations would not be able to curtail price increases through the Cooperative Agreement.

Of course, the actual contract to run .com is with ICANN. Bidzos said that ICANN historically deferred to the U.S. government on .com pricing. (In the 2012 renewal ICANN originally agreed to 7% increases but pulled that back when the U.S. government essentially vetoed it. The dynamic has definitely changed now, though, so it will be interesting to see how ICANN responds to the new Cooperative Agreement.)

Regarding working with ICANN to incorporate price increases into the current agreement that runs through 2024, Bidzos says Verisign has started negotiations with ICANN:

There’s a process for moving changes from the DOC to the Cooperative Agreement into the .com Registry Agreement. ICANN has historically as I mentioned deferred to the U.S. government on matters relating to com pricing.

But ICANN and VeriSign have an agreement to cooperate and negotiate — there’s a written agreement to operate — cooperate and negotiate in good faith to amend the com registry as may be necessary for consistency with changes to the Cooperative Agreement.

So we have begun that process with ICANN to amend the agreement to make these changes including pricing. And I don’t think I can comment further to process. We’ve been through it a few times. It may take a number of months to work through it, but we’ll update you as appropriate.

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