[ga] Current state of Versign's illegitimate activities
I apologize for the inflammatory nature of the document but I dont know how
else can years of persistent anticompetitive activity be addressed. I urge
DNSO representatives to aggressively pursue their mandate. Best Regards
What is Verisign really up to?
(Here is the stuff you wont see in their press releases)
Verisign is once again trying to exploit its monopoly status and drive its
competitors out of business. The Internet infrastructure gorilla, worth
over $6 billion in today's market, is still pushing its latest
anti-competitive tactic called the Waiting List Service to control the
secondary market for domains and force massive new costs on its small
For most of the Internet's history the government granted the former
Network Solutions Inc. monopoly status in domain registrations. This policy
was widely regarded as a failure since NSI did not meet basic service
levels and simultaneously forced every domain consumer to pay excessive
fees that some considered an illegal tax (usually $70-$119 per registration
wherein the new competitive market offers the same for about $10-$30 and
often provides enhanced service levels). Hence, the government tried to
break the monopoly by separating the now Verisign Global Registry with its
retail Verisign Registrar service. Unfortunately this new policy leaves a
monopoly on the registry side wherein every new competitor still has to pay
Verisign $6 for every registration to manage the central database -
eventhough the company is working against them in the marketplace. These $6
fees from competitors apparently rake in a cool $180 million per year for
Despite Verisign's monopoly power, competitors have been making inroads in
to the secondary domain market which includes previously owned but
currently expired domains. Versign is now asserting its power by announcing
they want to charge $35 to every competitor who wants to register an
expired name for their customer by getting on a Verisign controlled
"waiting list". This is a sevenfold increase in fees for all small
taxpaying registrars and appears to be blatantly contrary to agreements
guaranteeing competitors $6 registrations. Many new competitors who have
invested heavily in the secondary domain market would likely fail if
Verisign succeeds in instituting the WLS.
SnapNames, which currently makes the most money off expiring names, would
go out of business under this proposal and by far be its most vocal critic.
However, Verisign has agreed to purchase their support by "licensing their
technology". Similar technology could easily be adopted by Verisign and
would function much better since Verisign controls all the data concerning
expiring domains and the names themselves. This isnt rocket science - its
just allocating an expired name from one registrant to the next in a
database. Verisign merely needs SnapNames on their side so they are the
biggest proponent of the service instead of being the biggest opponent
which they would be naturally. SnapNames falsely professes to the public
that the majority of registrars support the WLS, while we have only heard
of one registrar supporter and dozens in opposition.
Verisign says the WLS is a way for them to save money on their technical
systems yet they already get an estimated $180 million a year to run the
database, competitors feel they don't make basic improvements to the
current system, and they will still be running the current system in
parallel for any domains that aren't purchase via the WLS and expire
naturally. Plus their recent policy to restrict the amount of traffic
coming in to their systems from other registrars seems to have solved the
main issue of excessive load on the Registry. If the WLS would save them
money on their systems then what's the logic to massively increasing
As you see the government allowed the monopoly to charge $6 to competitors
seeking to register names for their clients but Verisign is unilaterally
trying to change it to $35 for a huge portion of these registrations. They
also seek to control who is assigned all of these millions of expiring
names while currently its strictly first come first served. In our opinion
Verisign appears unable to compete on price and customer service in the
re-registration and domain brokerage areas and therefore they exert
monopoly influence to get their desired results. Since they control both
their legacy Registrar, with tens of millions of renewals per year, and the
central Registry, which seeks to dramatically increase competitors fees and
control all expiring domains, competition is stifled by an enormous
conflict of interest.
Even more alarming is that some competitors estimate that Verisign still
hoards over a million expired domains with no legitimate claim. BuyDomains
own research has uncovered at least hundreds of thousands that are long
expired but not released to the market. Most have expired many months if
not years ago by companies that are no longer in business or just don't
want to pay for a yearly renewal. In fact they have not released any
significant batches of expired names in the six weeks since they announced
the WLS (usually large batches of the names they are not hoarding are
released to the public weekly). By perpetuating the hoarding they prevent
any competitor from registering one of these expired names for a new
customer and simultaneously prevent a secondary market in these domains
from taking root. All the while they try to push through the Waiting List
Service and charge $35 instead of $6 for the names that should have been
available to the public long ago according to existing contracts with
regulating agencies. Competitor Register.com (Nasdaq:RCOM) is also hoarding
substantial numbers of expired names thereby helping stifle free market
activity themselves. The names Verisign hoards are often among the most
valuable since they (NSI) controlled 100% of the market in the Internet's
formative years when the first and best names were originally registered.
Sample "hoarded" domains are found at the bottom of this document. A
"Whois" lookup will show their long overdue expiration dates yet Verisign
wont delete them.
With the hoarding problem addressed above and the mandatory $6 domain fees
it is already quite difficult and expensive to operate in the domain
marketplace. With the risk of the proposed $35 WLS fees and additional
unfair rules being thrust upon the market there is an unacceptable business
risk placed on competitors. This makes raising capital, hiring employees,
and promoting competition even more difficult than it would be in a fair
marketplace, especially given the decline in the technology sector and the
September 11th economic fallout.
While this WLS has not yet been approved or rejected by ICANN we think that
proactive government involvement is in order. Companies hoping to compete
with NSI/Verisign have always suffered inequities in the marketplace and we
believe fairness has to be forced upon Verisign or they will never practice
fairly. In the interim many small competitors are likely to fail as a result.
Another sore spot with competitors is Verisign's habit of offering select
partners "Promotional" domains. It is estimated that over a million domains
have been given away free by the Verisign Registrar to their friends.
Trying to follow the money trail shows us the market inequities and may
raise Enron/Microsoft type concerns but on a much smaller scale.
While much of the below analysis on the effects of "promotional" domains is
highly speculative it is the best we can do without extensive research and
disclosure from Verisign.
The recipients of those promotions did not pay for those same registrations
from Verisign competitors who were not on the friends list - thereby
stifling the market. Customers often left preferred competitors in light of
the below market registrations offered by Verisign's friends.
The Verisign Registrar probably paid the Verisign Registry the required $6
per name, possibly grossing the Registry about $6 Million. Verisign
probably passed $6 Million from one department to the next at no net loss
but a competitor would have been drained by the entire $6 Million if trying
to offer that same promotion. The competitors who already have a difficult
time raising capital would have had an additional $6 Million expense above
that of their much larger monopolistic competitor if they wanted to
compete. As far as we know Verisign can continue to push this scheme on the
marketplace up to any cost level.
Wall Street may have been told of approximately an additional one million
registrations from the Registrar side while the Registry may have
simultaneously recorded $6 Million in revenue. This ability to manipulate
the marketplace cannot and could not be matched by competitors.
BuyDomains.com and most competitors think Verisgn's persistent
anticompetitive efforts in the marketplace are a sham on all domain
consumers and competitors. BuyDomains and dozens of other competitors are
urging authorities to put a halt to what they consider to be outrageously
anticompetitive behavior. Competitors want Verisign to release all expired
domains immediately, to rescind its WLS proposal, and to cease offering
"promotional" domains to business partners. We recommend that you contact
relevant government representatives to attempt to protect your rights as
domain consumers and domain registrars. The Department of Justice Antitrust
Division and the FTC have the greatest responsibility to act. Also ICANN
leadership and the DNSO need to act assertively in an effort to finally
create an open fair marketplace.
Michael F. Mann
301-530-8040 fax: 301-530-9611
President, BuyDomains.com - The World's Leader in Virtual Real Estate.
Executive Director, Grassroots.org - http://www.grassroots.org/
Sample Hoarded Domains and expire dates: (more available on request)
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