Tucows 2015 Annual Report Download - page 86
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Value-Added Services
Costs of revenues for Value-Added Services include licensing and royalty costs related to the provisioning of
certain components of related to hosted email, fees paid to third-party service providers, primarily for trust certificates and
for printing services in connection with Platypus. Fees payable for trust certificates are amortized on a basis consistent with
the provision of service, generally one year, while email hosting fees and monthly printing fees are included in cost of
revenues in the month they are incurred.
Retail
Costs of revenues for our provision and management of Internet services through our retail site, Hover.com,
include the amortization of registry fees on a basis consistent with the recognition of revenues from our customers, namely
ratably over the term of provision of the service. Registry fees, the primary component of cost of revenues, are paid in full
when the domain is registered, and are recorded as prepaid domain registry fees.
Portfolio
Costs of revenues for our Portfolio represent the amortization of registry fees for domains added to our portfolio
over the renewal period, which is generally one year, the value attributed under intangible assets to any domain name sold
and any impairment charges that may arise from our assessment of our domain name intangible assets. As the total names
in our portfolio continue to grow, this cost will become a more significant component of our cost of revenues. Payments
for domain registrations are payable for the full term of service at the time of activation of service and are recorded as
prepaid domain registry fees and are expensed ratably over the renewal term.
Costs of revenues for our larger ad-supported content site include the fees paid to third-party service providers,
primarily for digital certificates sold through our content sites and content license fees.
Network expenses
Network expenses include personnel and related expenses, depreciation and amortization, communication costs,
equipment maintenance, stock-based compensation and employee and related costs directly associated with the
management and maintenance of our network. Communication costs include bandwidth, co-location and provisioning
costs we incur to support the supply of all our services.
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