Network Solutions comment on .NET Renewal Agreement

["Hammock, Statton" <shammock@xxxxxxxxxxxxxxxxxxxx>]

Network Solutions appreciates the opportunity to comment on ICANN's
Proposed .NET Renewal Agreement.  

After reading through this Agreement, there is one clause that would
seem to require an explanation by ICANN.  In Section 7.3(a), the
Registry is permitted to raise the price for domain name registrations
10% each year without having to give any justification for the increase
(such as increased costs, to improve DNS security, etc). 

Competitive economics holds that declining input costs (bandwidth,
computation power and capacity, etc.) and expanding economies of scale
should result in lower prices.  This theory also applies to markets with
sole-source providers.  Yet gTLD registration and renewal prices have
only risen over the years - and almost certainly will continue to rise,
without justification, under this proposed Agreement.  There might very
well be a sound basis for a registry to increase fees at a particular
time, and such an increase would be permitted with the appropriate
cost-justification language.  

Additionally, in the latest discussion draft of the New gTLD Applicant
Guidebook released in April, ICANN appears to be prepared to defend
consumer interests.  Specifically, in the draft for the New gTLD
Registry Agreement, ICANN states that "the purpose of this Section
2.10(c) is to prohibit abusive and/or discriminatory Renewal Pricing
practices and this Section 2.10(c) will be interpreted broadly to
prohibit such practices."  If ICANN is adding registry obligations to
prohibit "abusive" practices (which, arguably, could include unjustified
pricing increases) in gTLDs that have no established base or economies
of scale, then why aren't such protections also extended to the
incumbent gTLDs? 

Other registry agreements have included provisions that require
justification for price increases. Why does this Renewal Agreement not
include such provisions?  It would be helpful if ICANN would explain the
justification for permitting annual fee increases without any cost
justification. Otherwise, the common sense approach, especially when
dealing with a sole-source provider, would seem to be the inclusion of
such a cost justification requirement.

Sincerely,

Statton Hammock 
Sr. Director, Law, Policy & Business Affairs 
Network Solutions