[alac] Removing Price Caps on Registry Fees

[Bret Fausett <bfausett@xxxxxxxxxxxxxxxx>]

Council Members (with copy to ALAC):

You may recall that in the draft .NET contract posted for comment 
several weeks ago, the pricing section was blank, with the following 
comment: [To be negotiated consistent with .NET RFP]. See Section 7.3 here:

http://www.icann.org/tlds/dotnet-reassignment/draft-net-agreement-9mar05.pdf

When the final negotiated version was published, I went to that section 
to find out what pricing had been negotiated and was surprised to 
discover that ICANN will lift the price caps on registry fees effective 
1 January 2007.  The language is here:

       (a) Prices for Registry Services.

        From 1 July 2005 through 31 December 2006, the price to
       ICANN-accredited registrars for new and renewal domain name
       registrations and for transferring a domain name registration
       from one ICANN accredited registrar to another, shall not exceed
       US$4.25 (consisting of a US$3.50 service fee and a US$0.75 ICANN
       fee). On 1 January 2007, the controls on Registry Operator's
       pricing set forth in this Agreement shall be eliminated,
       provided that the same price shall be charged to all registrars
       with respect to each annual increment of a new or renewal domain
       name registration, and for transferring a domain name
       registration from one ICANN-accredited registrar to another
       (provided that volume discounts and marketing support and
       incentive programs may be made if the same opportunities to
       qualify for those discounts and marketing support and incentive
       programs is available to all ICANN-accredited registrars).

       (b) Adjustments to Pricing for Domain Name Registrations.

       Registry Operator shall provide no less than six months prior
       notice in advance of any price increase for domain name
       registrations and shall continue to offer domain name
       registrations for periods of up to ten years.

See Scetion 7.3 here: 
http://www.icann.org/tlds/agreements/net/net-registry-agreement-01jul05.pdf

This strikes me as a significant departure from past practices, and I do 
not recall any discussion of this at either the Council level or within 
the ALAC. I wonder whether market forces will be sufficient to prevent 
Verisign from raising the .NET registry fees significantly. At a 
minimum, we should have had a conversation about this. Have I missed 
something?

          Bret

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