December 16, 2004 4:00 AM PST

Unnoticed fee could raise Net domain costs

Internet users may soon be required to pay an additional annual fee for each domain name they own, thanks to a virtually unnoticed requirement that will begin to take effect next year.

The Internet Corporation for Assigned Names and Numbers (ICANN), the international organization that oversees domain names, is moving forward with a 75-cent annual fee for .net domains starting next year and is expected to expand the levy to other generic suffixes such as .com and .biz in the future.

A small but growing number of critics, however, charge the proposal amounts to a surreptitious tax that will allow ICANN to expand its budget with minimal oversight and divert the money to projects of dubious merit. When the fee takes effect with .net, domain name owners will pay an additional $4 million a year, a figure that would leap to more than $34 million if the fee is extended to .com and other popular top-level domains. That's far more than ICANN's annual budget.

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What's new:
ICANN is moving forward with a 75-cent annual fee for .net domains starting next year and is expected to expand the levy to other generic suffixes such as .com and .biz in the future.

Bottom line:
Critics say ICANN's proposal amounts to a surreptitious tax that will allow the organization to expand its budget with minimal oversight.

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"The fee idea is the worst thing I've heard since Bill 602P, the e-mail taxing plan from Canada. And at least that was fictitious," said James Gattuso, a fellow at the Heritage Foundation, an influential conservative organization in Washington, D.C. At the very least, Gattuso said, domain name fees should be decided "by an outside authority, not ICANN itself."

The forthcoming requirement from ICANN is striking because the organization had proposed a $1 annual tax on domain names five years ago and was soundly rebuked by politicians and conservative activists. In addition, President Bush and Congress signaled their distaste for online taxation by enacting a moratorium earlier this month curbing taxes on Internet access.

The 75-cent annual charge would not be the first that's payable to ICANN; the group recently imposed a 25-cent annual charge on .com, .net, .org, .biz, .info, and .name domains. With the forthcoming .net charge, ICANN's cut of those domain name registrations would increase to $1 a year. (About 46 million domain names are registered that end in the six most popular suffixes, according to Domain Intelligence.)

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