January 2014. The first registry contracts have been signed. The first Sunrise priority registration periods have been opened. The new gTLD program is well on the way.

So maybe now, at last, we can start to find out the real costs of opening up the Internet root? And how much revenue doing so has brought ICANN!

Short answer: ICANN has taken in USD 344.958 million from the first round of new gTLD applications. The figure comes from the first of ICANN’s quarterly financial statements, covering the three months up until September 30th.

With an initial 1,930 applications received, round one actually netted ICANN $359.994 million. But subsequent reimbursements at percentages of 80, 70 and 35 of the total $185,000 application fee meant that $15.037 million were handed back to applicants who, for one reason or another, had withdrawn their claim to a new gTLD.

So far, the program has cost ICANN $119.203 million, including $3.3 million for the team specifically tasked with handling the program, and a further $9.46 million for regular ICANN staff.

Little left over

But once the dust settles on this first round, ICANN actually estimates the program will end up bringing in $363.342 million thanks to additional fees charged for carrying out changes to applications. But costs are also set to increase as ICANN continues to process the round one applications. The organisation sees the program ending up costing it $204.283 million.

That would leave a surplus of $107.035 million, but in actual fact ICANN may end up being out of pocket to the tune of $3.065 million in accounting terms because of the significant funds it has to set aside to manage risks!

This obviously flies in the face of current expectations that ICANN would end up with more money than ways to spend it after closing the first round. Yet it’s a situation that was recently confirmed by ICANN Board Chair Steve Crocker.

Responding to suggestions that ICANN use its significant proceeds from the new gTLD program to support other actions, Crocker confirmed that the priority was to first pay for this ambitious drive to expand the Internet namespace.

“The first use of the revenues from the gTLD program will be to cover the expenses of the gTLD program,” he wrote in an email sent to a public list. “Although the revenues are quite a bit higher than originally expected, the expenses are too. It is not yet clear whether there will actually be any surplus, nor is clear how soon such surpluses would become available.”

One of the reasons many expect a significant surplus is the upcoming auction process. “What I’ve said several times is that the surplus, if any, generated by the gTLD applications and the proceeds, if any, from the auction process will be treated separately and not be folded into the general revenue stream,” Crocker added. “We have not made any decision about what to do with these funds.”

That’s because right now, no-one knows what funds there will be. “The reason we haven’t made a plan yet is because we don’t have any sense of the magnitude of the amounts we’re talking about,” Crocker confirmed. “Once we have a general sense of the amount we can move into a discussion of what to do with it and what mechanisms would be appropriate. Very different discussions will take place depending on whether the number is around $1MM, $5MM, $20MM, $50MM or $100MM.”

One thing Crocker did commit to is being transparent about whatever process ICANN ends up working through to assign the surplus, even though he is not at all convinced at this stage there will be one. “We will run a fully open process when the time comes,” he pledged. “Although I am strongly committed to making sure whatever surplus there is from the gTLD applications and from the auctions is curtained off and treated separately, I have a fairly conservative view of the likely amount.”