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.
History
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.
Financials
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.
Take-aways
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.
*
Nail. On. Head.
I thought that .tel had a good chance of striking gold, and I think it might have had website capability had been part of the package.
Also, had the gTLD been approved in 1999, we very well might be seeing a very different web.
*
we have few dozens of .tel I have stopped renewing them for 2014 I am sure that most of the new TLDS will face the same result few years from now.
Funny enough when it comes to innovation .TEL is ahead compared to the rest of the gTLD’s that are going to be released.
What happens to .tel when Telnic finally runs out of money and goes out of business?
Thing is it’s not a small business game. If they finish $35 million, they’ll get another $35 million!
I’m surprised they’ve spent as much as they have though, the registry part couldn’t have cost so much. Which is borne by the fact that most of the money was spent on stuff before the registry even started.
It’s going to be the same for registries which pay big figures in auction for their string.
But in terms of operational cost, any registry with more than 100k registrations should be profit making operationally at least.
The inability to add a website hampers .tel incredibly, or it might turn out to be a boon for the company when people only want business card type websites.
Great informative post, i am happy to read it..Waiting for the next..Thank you..
Bleeding cash waiting for a buy out?
Good luck.
At one point, Telnic had the intention of accrediting hosting service providers, which would have allowed registrars and/or other interested and capable entities to get a share of the .TEL pie through hosting. However, this idea either never came to fruition or it might have taken too long to implement, resulting in the current state of things.
Hopefully, some miracle can happen that would salvage the TLD, because it really was an ingenious creation when you consider its potential capabilities.
Nice work, Andrew. That’s some fresh content.
It seems to me they have not done a good enough job of marketing. When’s the last time anyone has seen an ad from them? I think it has been years for me.
What is the real reason why Godaddy won’t have .tel ?
@ Jean
“What is the real reason why Godaddy won’t have .tel?”
I suspect it has a lot to do with the difficult integration and inability to sell whois privacy or hosting with it.
I don’t goin to renew 80% of my tel domains
It was an interesting idea at the onset in 2009 when a lot of people still didn’t have smartphones and the directory listing format made sense on a small screen phone. I own several one word .tel domains and like many just wait for the day when the registry opens it up where the domains can be hosted anywhere and users can publish their own content etc. just like any normal domain extension. They would likely gain many fold new .tel registrations and it has the potential to be a more attractive extension than .mobi, and with so many products such as gift cards, coupons, games etc. all being formatted for phone use and scanning in stores by the checkout person it could really turn the corner for .tel.
A timely follow-up to the original DNW article at https://domainnamewire.com/2008/11/10/telnic-a-35-million-investment-gone-awry