[council] Removing Price Caps on Registry Fees

[Bret Fausett]

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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