Verisign Retains .com Control Until 2012

Several readers wrote to note that the U.S. Department of Commerce, in a controversial deal, has extended Verisign's control of the .com domain. Verisign got the right to raise prices in four of the six years of the contract, by up to 7% each time. From the article: "Verisign has control of .com and .net locked up for the next several years, but there will still be a modicum of oversight. [Commerce] retains final approval over any price hikes, and has said that any subsequent renewal of the contract will occur 'only if it concludes that the approval will serve the public interest in the continued security and stability of the Internet domain name system... and the provision of registry services at reasonable prices, terms and conditions.'"

No, it is not a good thing.

[swbrown]

Verisign abuses their monopoly and shouldn't be allowed to keep it. http://www.theinquirer.net/default.aspx?article=11 569 [theinquirer.net]

Re:Technology Advances

[Anonymous Coward]

You seem to have little understanding of how domain registries work. They're talking about the registration fee paid by all registrars for every domain in Verisign's TLDs. This is less than $6, and it's being paid whether you use GoDaddy, Verisign, or any other registrar.

Re:Is it a coincidence?

[OxygenPenguin]

I guess that's one way of putting it. The mayan calendar predicts a massive change in the earth every 640 years, of which the next is 2012, as you noted. I suppose the end of the world "as we know it" would technically be correct, but a major planetary change, however initially subtle, is definitely coming up according to them.

Re:Technology Advances

[aliendisaster]

Actually, unless they have changed, the registrar I used to work for payed $6.25/domain to Verisign.

Re:It's a good thing if you ask me

[Artifakt]

There's not anything directly under Department of Commerce's oversight duties, but there is something else under IRS and possibly its state equivalents that looks intriguing to me. (Warning: I am most seriously not a lawyer. I am a tax professional, but this is not my professional tax advice, it's mere speculation. I specifically have absolutely no knowledge of whether the IRS, or the taxation services of any U.S. states is/are currently considering any such interpretations or rulings as I discuss below. If you consider the following as investment advice, I can be held in no way responsible. That would be dumb, m'kay?)

Corporations normally enjoy advantagious tax status for just about all their investments, if for no other reason than because they can usually represent them as long term, and long term capital gains (over one year) has a much better base rate. If, however, IRS were to rule that selling a given domain name for a large markup was a pure 'windfall profit', this could in theory result in seperate windfall profit taxes, a higher base tax rate, and/or quite possibly even penalties on previous year's fileings. Costs of compliance with any such ruling would likely be entirely born by the corporation involved, and would likely need to be accomplished in no more than two quarters, with obvious risks to corporate liquidity and future profitability.

You ask (approximately) 'is there anything that says they can't?' - They still technically 'could', but under those circumstances, making money at it would be near impossible. Would such a ruling stand up long term, in tax court? Ask a fully trained legal specialist in the field, and if this impinges on your investment plans, my personal advice is to please make certain he or she is liscenced to practice both in your state or the state of incorporation and before the SEC and federal tax courts.