ICANN Feels The Heat

The Internet Corporation for Assigned Names and Numbers (ICANN) is feeling the heat of protest from a group of 75 worldwide registrars angry over the significant increase in registrar fees proposed in ICANN’s latest budget – fees which could put many registrars out of business, and hinder the globalization of the Internet – which ICANN is mandated to promote.

Directi chairman and CEO Bhavin Turakhia, commented on the smaller registrar’s inability to compete in face of increased fees, stating “There are registrars out there who are large in their country but small if you compare them to the ones in the United States,” echoing the group’s sentiment that what seems to be a fair pricing structure for “the big boys” is unrealistic and anti-competitive in the face of smaller global market’s economic realities.

Previously, the amount of global top-level domains (gTLDs) a registrar wanted to sell names from determined the fees they paid for the privilege, with a base fee of $4,000 per year in order to handle “dot com” transactions, with an additional $500 annually for each extra gTLD, such as .net or .tv

The new fee structure proposed by ICANN, however, has an annual base fee of $4,000 per registrar in order to market names from any gTLD, but instead of additional fees per gTLD, a uniform surcharge will be imposed on all registrars, regardless of their size or location. This variable fee is currently projected to be $19,289 annually, based on ICANN’s $3.8 million annual registrar support expense divided by the total number of 197 current ICANN-accredited registrars.

For many registrars, this new fee structure equals a whopping 475% increase from the previous year. While the fee would fluctuate based on the number of registrars, even at ICANN’s estimated goal of 250 registrars, the annual fee would still be $15,200.

This is not the only increase in fees facing registrars, as ICANN is also imposing an increased transaction fee of 25 cents for each new, renewed, or transferred domain name, up from the previous rate of 12-18 cents per name based upon transaction volume.

While Turakhia has proposed an alternate budget which included the $4000 annual fee for selling all current gTLDs as well as the 25 cent transaction fee, it did away with the variable fee.

Negotiations are underway, although the final outcome is not yet clear.