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VeriSign to increase eCommerce operating costs

April 7, 2007

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On April 5, VeriSign said it will increase the fees it charges individuals and organizations to register Web domain names ending in the .com and .net extensions. VeriSign, which controls the two most popular domain name extensions on the Internet, said the annual increase for .com will be of 7 percent to US $6.42, and that the .net fee increase will be 10 percent to $3.85.

The company collects fees from domain name brokers and domain registrars that sell domains on its behalf, and in turn is supposed to use the money for the upkeep of that domain.

The cost increases are allowed under the renegotiated registry agreement between VeriSign and ICANN (the Internet Corporation for Assigned Names and Numbers), which was settled in November of last year.

Under the agreement, VeriSign can raise fees without explanation by up to seven percent in four of the next six years. As these increases were higher than that threshold, a reason was required.

The rate hike is a response to increased Internet traffic and DNS (domain name system) queries on VeriSign's global servers, which have increased from an average of 1 billion queries per day in 2000, to nearly 30 billion plus queries per day in 2007, the company said.

VeriSign added that, additionally, there is a need to create a better security infrastructure to protect the domain name system, and to fight back against cybercriminals and potential Internet hackers.

Tom Galvin, a VeriSign spokesperson said "there has been a tremendous increase in Internet usage, while at the same time bad guys continue to look for vulnerabilities on the infrastructure."

Galvin also noted that caring for the system is much more intensive then it was a few short years ago. "This will be the first registry fee increase for .com and .net since the fee structure was put in place by ICANN eight years ago."

ICANN is the private sector, nonprofit organization created nine years ago to assume overall responsibility for the Internet's system of unique identifiers, including domain names and the addresses used in a variety of global Internet protocols.

Six weeks ago, VeriSign announced Project Titan, an internally-conducted initiative to further expand the capacity of its DNS system at least tenfold in less than three years from now, to 4 trillion queries per day.

Furthermore, and according to Galvin, this extra capacity is needed in order to better respond to any unusual surges from legitimate demand, as well as to overcome any DoS (Denial-of-Service) or other potential hacker attacks on the Internet.

Under the ICANN agreement, VeriSign will control the master database of the two domains until 2012. With about 62 million .com domain names and 9.1 million .net domains currently in use, VeriSign stands to generate substantial revenue from the price hike.

Much to the benefit of VeriSign, the fee increase doesn't even require regulatory approval.

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Source: eCommerce Times



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