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New gTLD applications to cost about $250,000

Kevin Murphy, December 8, 2022, 09:15:04 (UTC), Domain Policy

Getting hold of a new gTLD could cost applicants well north of a quarter million dollars in base application fees alone in the next round, according to ICANN.

Presenting the results of its year-long Operational Design Phase to the GNSO Council via Zoom last night, staffers said application fees are likely to be either around $240,600 or $270,000 next time, higher than the $185,000 it charged in 2012.

Those would be the base fees, not including any additional evaluations or contention-related fees.

The Org next week is set to present its board and the community with a stark choice — one big expensive round along the lines of 2012, with a potential five-year wait for the next application window to open, or a cheaper, staggered four-stage round with maybe only 18 months of development time.

The Operational Design Assessment — a 400-page tome the Org has spent the last 14 months developing — is set to be published early next week, outlining two options for how ICANN should proceed on the next round.

One option is to build a highly automated system that fully implements all of the GNSO’s policy recommendations but costs up to $125 million up-front to build and roll out over five years. Application fees would be about $270,000.

The other would cut some bells and whistles and require more human intervention, but would be cheaper at up to $67 million up-front and could be rolled out within 18 months. Application fees would be about $240,600.

ICANN CFO Xavier Calvez, responding to exclamations of surprise via Zoom chat, said that a decade of inflation alone would lead to a 28% price increase to $237,000 if the next round were opened today, but in two or three years the price could be even higher if current economic trends continue.

While many expected the fact that technical evaluations will be conducted on a registry service provider basis rather than a per-application basis would wipe tens of thousands from the application fee, ICANN pointed out that building and executing this RSP pre-evaluation process will also cost it money.

ICANN wants to operate the program on a “cost-recovery basis”, so it neither makes a profit nor has to dig into its operational budget. It expects “more than three dozen vendors will be required” to help run the round.

It seems that the portion of the fee set aside to deal with “risks” — basically, anticipated litigation — is expected to be around a fifth of the total, compared to about a third in the 2012 round.

ICANN is asking its board and the community to decide between what it calls “Option 1 — One Big Round” and “Option 2 — Four Annual Cycles”.

Option 1 would essentially be a replay of 2012, where there’s a single unlimited application window, maybe a couple thousand applications, and then ICANN processes them all in a highly automated fashion using custom-built software.

Option 2 would allow unlimited applications once a year for four years, but it would cap the number processed per year at 450 and there’d be a greater degree of manual processing, which ICANN, apparently unfamiliar with its own history of software development, thinks poses additional risk.

My hot take is that the Org is presenting a false choice here, much like it did in January with its ODA on Whois reform, where one option was so unpalatably time-consuming and expensive that it had most of the community retching into their soy-based lattes.

There’s also an implicit criticism in both ODAs that the community-driven policy-making process has a tendency to make big asks without adequately considering the resources required to actually get them done.

I might be wrong, but I can’t at this early stage see much support emerging for the “One Big Round” option, except perhaps from the most ardent opponents of the new gTLD program.

ICANN expects to deliver the ODA — 100 pages with 300 pages of appendices — to its board on Monday, with wider publication not long after that. It will hold two webinars for the community to discuss the document on Wednesday.

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Comments (6)

  1. Rubens Kuhl says:
    December 8, 2022 at 9:29 am

    It’s curious that while ODAs carry the message from Org that the community shouldn’t make decisions, most of the SubPro outputs were actually to streamline the 2012 process, where Org chose to do things the hard and expensive way, and blame the community then.

    So, it’s just 10 years they need for people to forget who actually makes bad decisions ?

    Reply
  2. John Berryhill says:
    December 8, 2022 at 9:22 pm

    This is beautiful:

    “a decade of inflation alone would lead to a 28% price increase to $237,000”

    ICANN ended up with a $36 million surplus from the new TLD fees (the other $32 million went into replenishing the reserve fund), and another $240 million from the auctions – so much money that they do not know how to spend it.

    Literally! There is a “New gTLD Auction Proceeds Cross-Community Working Group” which has published an initial report on what to do with all the extra money they collected.

    But, inflation has driven up some underlying cost of collecting close to $300 million and sitting on it?

    That’s absolutely hilarious.

    Reply
    • Steve GOBIN says:
      December 12, 2022 at 12:09 pm

      Not to mention that some of the work done for the 1st round can be re-used for future rounds, thus the disbursed money for each future round should be much less than for the 1st round.

      Reply
  3. Jeffry Stoud says:
    December 9, 2022 at 8:02 am

    I believe this increase along with the offloading of responsibility of man in the middle attacks will end up being the decrease in ICANN TLDs and the increase in decentralized TLDs such as Handshake blockchain TLDs with over 8 million registered.

    Reply

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