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Double-charging claims as registries ramp up new gTLD refund demands

Kevin Murphy, October 10, 2017, 14:56:36 (UTC), Domain Registries

Registry operators have stepped up demands for ICANN to dip into its $100 million new gTLD cash pile to temporarily lower their “burdensome” accreditation fees.
A new missive from the Registries Stakeholder Group to ICANN this week also introduces a remarkable claim that ICANN may have “double charged” new gTLD applications to the tune of potentially about $6 million.
The RySG wants ICANN to reduce the quarterly fixed fees new gTLD registries must pay by 75% from the current $6,250, for a year, at a cost to ICANN of $16.87 million.
ICANN still has roughly $96 million in leftover money from the $185,000 per-TLD application fees paid in 2012, roughly a third of which had been earmarked for unexpected expenses.
When Global Domains Division president Akram Atallah refused this request in August, he listed some of the previously unexpected items ICANN has had to pay for related to the program, one of which was “implementation of the Trademark Clearinghouse”.
But in last week’s letter (pdf), the RySG points out that each registry was already billed an additional $5,000 fee specifically to set up the TMCH.

Your letter states that registry operators knew about the fee structure from the start and implies that changes of circumstance should be irrelevant. The TMCH charge, however, was not detailed in the applicant guidebook. ICANN added it on its own after all applications were accepted and without community input. Therefore, ICANN is very much in a position to refund registry operators for this overcharge, and we request that ICANN do so. Essentially, you would be refunding the amounts we paid with our own application fees, which should have been used to set up the TMCH in the first place.

These additional fees could have easily topped $6 million, given that there are over 1,200 live new gTLDs.
Was this a case of double-charging, as the RySG says?
My gut feeling is that Atallah probably just forgot about the extra TMCH fee and misspoke in his August letter. The alternative would be a significant accounting balls-up that would need rectifying.
RySG has asked ICANN for a “detailed accounting” of its new gTLD program expenses to date. If produced, that could clear up any confusion.
Group chair Paul Diaz, who signed the letter, has also asked for a meeting with Atallah at the Abu Dhabi public meeting later this month, to discuss the issue.
The letter also accuses ICANN of costing applicants lost revenue by introducing policies such as the ban on two-letter domains, increased trademark protections, and other government-requested restrictions that were introduced after application fees had already been paid.
The tone of the letter is polite, but seems to mask an underlying resentment among registries that ICANN has not been giving them a fair chance to grow their businesses.
UPDATE: This story was updated October 12 to correct the estimate of the total amount of TMCH setup fees collected.

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Comments (4)

  1. Richard Funden says:
    October 11, 2017 at 9:45 am

    AA probably referred to the other side of the TMCH fees, e.g. the registrar fees, which were fully funded by ICANN.
    Otherwise, a lot less registrars would have offered new gTLD domain names in the claims phase, rendering the TMCH worthless.

    Reply
  2. Marajaroon says:
    October 11, 2017 at 4:35 pm

    Face it, the gTLD program was a failure from the onset and those who partook in it are about to lose money. To now cry foul asking for a 75% discount from ICANN is wrong simply just because sales were pathetic. That should have been obvious to anyone with a pulse. It was a bad business decision, but they knew what they were getting into.

    Reply
    • Rubens Kuhl says:
      October 14, 2017 at 2:06 am

      Actually they didn’t. Some editions to the guidebook were made June 2012, long after the application window, and some impactful decisions like requiring RAA 2013 registrars were also not said at first. ICANN turned most business plans into useless piles of paper due to its own decisions…

      Reply
      • Kevin Murphy says:
        October 14, 2017 at 9:11 pm

        I would venture that a more important unknown was the number of applications. Had there been a dozen applications rather than close to 2,000, the market would be a very different place today.

        Reply

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