VeriSign Inc. will run the key directories that keep track of ".com" domain names until at least 2012 as the U.S. Commerce Department approved a lucrative contract extension.
The government's clearance Thursday was the final one needed for VeriSign to extend its hold over the most popular suffix on the internet, for which it now makes $6 US per name each year, or about $350 million for the nearly 59 million names registered.
Shares of Mountain View, Calif.-based VeriSign jumped $1.82, or 7.5 per cent, to close at $26.09 on the Nasdaq Stock Market.
VeriSign reached a contract agreement earlier with the Internet Corporation for Assigned Names and Numbers, the organization that oversees the Internet's domain-name policies. Commerce has veto power over ICANN decisions.
In approving the extension, Commerce said it would require VeriSign to obtain prior government approval for any further changes in the contract's pricing provisions or for any subsequent renewals— important because the government has indicated it was reducing its oversight over ICANN.
Critics had urged Commerce to reject the contract, complaining among other things that VeriSign would no longer be required to invest in the Domain Name System's infrastructure and that the company would get first dibs to renew the contract in the future.
Commerce sought to address that by stating that any renewals would be granted only if "the approval will serve the public interest."
In a statement, VeriSign said it was continuing to invest tens of millions of dollars in the infrastructure, even if the contract no longer specifies any minimums.
The directories in question are necessary for computers to know where to find websites and send e-mail with addresses ending in ".com." Millions of people around the world depend on them every day, but rarely know it.
VeriSign also runs the ".net" directories as well as the master computers that list the internet's more than 250 suffixes.
Under the deal ICANN approved in February, VeriSign is allowed to raise its annual fee for domain names, which resellers may pass along to consumers. It is currently $6, and VeriSign will be allowed to increase it up toseven per cent a year for four of the next six years. The company may also raise fees during the other two years under limited conditions.
VeriSign initially had a contract through 2007, but agreed to an early rebidding in exchange for a more lucrative extension for ".com." With the contract extension approved, both sides are dropping lawsuits filed against each other over, among other things, the introduction by VeriSign of a controversial search service called Site Finder.