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Neustar Losing .us Could Be Good for .com Registrants

Neustar is facing a potential loss of the Dot-US franchise as competitors bid against them. Why might this be of interest to .com registrants?

When the US Department of Commerce approved the new .com agreement [PDF], which permitted VeriSign to raise prices without reference to any increase in costs or facing any competition, they stated:

This approval is not intended to confer federal antitrust immunity on VeriSign with respect to the Registry Agreement. (page 4, section 5)

The issue of antitrust with regards to the .com agreement has never really been properly settled, as a well-funded complainant hasn't brought forward a case to full fruition in the courts. ICANN sold out the public by agreeing to a settlement that would see its own coffers swell, at the expense of registrants, so they do not count.

However, consider a "thought experiment" should Neustar lose the .us contract. If one compares the stock prices of VeriSign (symbol VRSN) to Neustar (symbol NSR) over the past year, Neustar is treading water, with a slight loss year-over-year, whereas VeriSign is up by over 60%, in large part due to the renewal of the .com agreement under very favourable terms. Neustar still has a market capitalization of over $2 billion, thus they have the deep pockets to take on VeriSign in the courts.

Neustar itself had to decrease prices to win a contract extension for operation of the American telephone database. If they are squeezed by competitive pressure on the Dot-US contract, they may have nothing to lose by choosing to take on VeriSign for operation of the .com registry. Assuming the Dot-US wholesale price for domain names drops, perhaps to $2 or $3 per year, the increasing price gap compared to Dot-COM will become glaring evidence of monopoly power. This increases the chance of an antitrust suit succeeding.

Thus, if you are a registrant of Dot-COM domain names, cross your fingers that Neustar management feels some heat over the Dot-US contract. With its stock underperforming, a loss of Dot-US to GoDaddy and Afilias might just be the kick in the pants they need to challenge VeriSign once and for all over Dot-COM.

By George Kirikos, President, Leap of Faith Financial Services Inc.
Related topics: DNS, Domain Names, ICANN, New TLDs
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Re: Neustar Losing .us Could Be Good for .com Registrants Katya Nováková  –  Aug 07, 2007 4:05 AM PST

If I'm not wrong the registry price for .us is $5.50
which means .us is already cheaper than .com, whithout the economies of scale.

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Promoted Post

Buying or Selling IPv4 Addresses?

Watch this video to discover how ACCELR/8, a transformative trading platform developed by industry veterans Marc Lindsey and Janine Goodman, enables organizations to buy or sell IPv4 blocks as small as /20s.