As part of the new gTLD program, all new gTLD applicants are required to provide for three years of operating expenses, in the way of a cash deposit with a bank that meets ICANN qualifications which is also set out below.
ICANN however has not put the pencil to this requirement and the Guidebook does not contain actual numbers or the amount of cash the applicants need to budget for.
This document issued by ICANN today, attempts to give gTLD applicants some guidance on the amount of the cash reserve they will have to have deposited to meet the three year operating cash reserve requirement.
How much money a new gTLD applicant is going to have to place into an account, depends on the anticipated number of domains the gTLD operator is planning on, but according to this document, a new gTLD operator needs to budget somewhere between $18K and $300K to meet its three year reserve requirement.
Of course this is in addition to the $185,000 application fee.
“Several community members and prospective applicants asked ICANN for further guidelines regarding the calculation of these estimated costs. After analyzing the costs provided from several potential providers who responded to the recent EBERO-RFI (Emergency Back End Registry Operator – Request for Information) (see: http://www.icann.org/en/announcements/announcement-2-14sep11-en.htm), ICANN is providing the cost guidance in the table below.”
“The numbers provided are based on data gleaned from the proposals received, and are for guidance only. ”
“None of the costs in the table are identical to the estimates provided by the potential providers. ”
“All applicants are expected to complete calculations according to their particular circumstances, and to provide rationale for their cost estimates commensurate with the technical, operational, and financial approach described in the application.”
“Also note that these are costs only for providing the five critical registry functions identified in this process. These cost guidelines are not representative of the costs needed for running all of the services associated with operating a gTLD.”
“Applicants should ensure that the financial instrument will cover the costs for the five critical registry functions for a period of three years using the applicant’s projections of domain registrations under management.”
Continued Operations Instrument guidance:
|Projected Number of Domains||Estimated 3 Year COI (USD)|
Note: The minimum COI for any new gTLD should be US $18,000. The Maximum COI for any new gTLD need not be more than US $300,000.
Bank rating guidance
“The financial instrument must be issued/held by a financial institution rated “A” or above (or the equivalent) by any of the following rating agencies: A.M. Best, Dominion Bond Rating Service, Egan-Jones, Fitch Ratings, Kroll Bond Rating Agency, Moody’s, Morningstar, Standard & Poors, and Japan Credit Rating Agency.”
“If applicant cannot access an “A” rated financial institution, but a branch or subsidiary exists in the applicant’s local jurisdiction then applicant may use any local institution with a similar or higher rating.”
“As a last resort applicants may use the highest-rated financial institution in their national jurisdiction, if accepted by ICANN.”
“Note: For any financial instruments that contemplate ICANN being a party, upon the written request of the applicant, ICANN may (but is not obligated to) execute such agreement prior to submission of the applicant’s application if the agreement is on terms acceptable to ICANN. ICANN encourages applicant to deliver a written copy of any such agreement (only if it requires ICANN’s signature) to ICANN as soon as possible to facilitate ICANN’s review. If the financial instrument requires ICANN’s signature, then the applicant will only receive 3 points for question 50 (for the instrument being “secured and in place”) if ICANN executes the agreement prior to submission of the application. ICANN will determine, in its sole discretion, whether to execute and become a party to a financial instrument.”
Why is the Continued Operations Instrument important?
As registrant protection is critical, new gTLD applications are required to provide evidence that the critical registry functions will continue to be performed even if the registry operator fails. The critical functions of a registry which must be supported even if an applicant’s business and/or funding fails are: (1) DNS resolution for registered domain names; (2) operation of the Shared Registration System; (3) provision of Whois service; (4) registry data escrow deposits; and (5) maintenance of a properly signed zone in accordance with DNSSEC requirements. This provides an opportunity for existing registrants in the TLD to maintain existing services dependent on registered domain names, and creates the ability for these registrants to plan for an extended transition where necessary.
ICANN’s core values and bylaws states that preserving and enhancing the operational stability, reliability, security, and global interoperability of the Internet should guide ICANN’s decisions and actions. The Continued Operations Instrument requirements are in pursuit of this principle and as a result of the development of ICANN’s Registry Continuity Framework.”””