Thursday, May 2nd, 2013
Telnic has lost £25 million since it was founded — and much of that was before .tel even launched.
It’s been a long and winding road for many new top level domain applicants. But most of the delays and challenges new TLD applicants have faced pale in comparison to the very long, very expensive road that .tel registry Telnic has traveled.
What is .tel?
.Tel is a unique sponsored top level domain.
A couple things make .tel particularly unique. First, you can’t host a web site on the domain. Your only option is to create a directory style site such as this. Second, the directory data is stored directly within the DNS.
Telnic’s genesis was in 1999. Telnic Limited, the company that currently runs .tel, was officially founded the next year.
The company applied for .tel in 2000 but the application was not approved by ICANN. It resubmitted its application in 2004 and finally inked a contract with ICANN in 2006. It then experienced further delays due to concerns about WHOIS policy conflicting with European Union and UK privacy laws.
It wasn’t until December 2008 that the company started its sunrise period. Landrush followed in February 2009 and the domain was finally made available to all registrants in March 2009.
Although it took a decade before the company was able to launch .tel, it was supported by investors that offered it $35 million in financing (as of 2008).
According to financials filed with the United Kingdom government, the company had cumulative losses of nearly £25M as of June 2012.
In the fiscal year ending June 2008, Telnic had an operating loss of £4.5M. It had already racked up close to £10.5M in losses over its lifetime. The following year, which concluded just a few months after general availability of .tel began, Telnic suffered a £4.1M operating loss. (Because most domain registries recognize revenue over the life of a domain registration, little revenue came in the door that year. It ended the 2009 fiscal year with £1.2M in deferred revenue.)
The company has yet to turn a profit.
Telnic Limited ended June 2012 with £6.0 million in cash. That’s a lot of cash to support a relatively small domain registry, and is likely much more than a number of new top level domain applicants are bringing to the table. Yet that sum was down from £9.7M the previous year. If annual cash outflows continued in 2013 at the same pace as in 2011 and 2012, Telnic’s cash balance will be around £3.0 at the end of this fiscal year (next month).
Telnames Limited, a wholly owned subsidiary that helps promote .tel, had £0.3M in cash at the end of June 2012. The subsidiary owed Telnic Limited £1.4M as of last June.
Will .tel be able to turn the corner? As of the end of 2012 it had 218,825 registered domains according to reports filed with ICANN. That number of domains alone isn’t enough to support the cash outlays it has made over the past couple years.
New TLD applicants can learn some lessons from .tel.
First and foremost, keep it lean until you’re close to revenue.
Second, a unique domain isn’t easy to sell.
.Tel is the most innovative type of domain around. It functions like an online directory page and uniquely stores data directly within the domain name system.
Yet that innovation has created challenges with domain registrars. Because registrants cannot create a web site on the domain names, it reduces the revenue registrars typically make by selling add-on services. Registrars also had to integrate systems for managing the content on .tel domains.
Perhaps for these reasons, Go Daddy doesn’t carry .tel. That’s important given the registrar’s dominance in the industry.
New TLD applicants should take note.