Under a contract, which expires Friday, VeriSign was guaranteed four price increases of up to 7 percent each on domain name registrations. VeriSign sought a similar guarantee in the renewal, but the Commerce Department rejected it. In a statement Friday, VeriSign said the new contract freezes the current annual price at $7.85 per name, barring special circumstances.
"Consumers will benefit from VeriSign's removal of the automatic price increases," Lawrence E. Strickling, assistant Commerce secretary for communication and information, said in a statement. "At the same time, the agreement protects the security and stability of the Internet by allowing Verisign to take cost-based price increases where justified."
Anyone who wants a ".com" name can obtain one from various companies, which then pay VeriSign $7.85 of what it collects. The new contract lets VeriSign continue collecting those fees, but won't guarantee more.
The $7.85 fee translates to $785 million a year in revenue for the roughly 100 million existing ".com" names. Had VeriSign been allowed to raise prices four times by 7 percent each, as called for in a draft of the new contract, the company could have charged as much as $10.29 by the end of the six-year term. That would have meant an additional $244 million a year on those 100 million names.
VeriSign's stock fell $4.89, or 12 percent, to $34.45 in late morning trading Friday.
VeriSign had justified previous price hikes by pointing to its need to ensure that ".com" directories run smoothly amid increases in Internet traffic and heightened security threats. The directories are used by millions of computers and mobile devices around the world to locate websites and send email to addresses ending in ".com."
VeriSign's contract is with the Internet Corporation for Assigned Names and Numbers, a nonprofit organization that oversees Internet address policies. ICANN tentatively approved a contract extension with price increases in June, but it needed the Commerce Department's approval. Commerce removed the price hikes and approved the modified contract Thursday.