Becoming an ICANN accredited Registrar

Due to a recent question on DNForum by DNGod (“Can buy ICANN-accredited registrar“), I decided to finally update and publish this post, which had been sitting around as a draft for a while. Thank you for the inspiration 🙂

Apply versus Buy

If your organization has decided to become an accredited registrar, there are two choices in order to become operation. You can either apply for a new accreditation, purchase a company that owns an existing registrar or lease an existing registrar. Either way has it’s advantages and disadvantages.

While we will also be looking at the cost of the actual transaction, please keep in mind that this article does not consider the actual cost of running a registrar, which is the same, no matter if you buy an existing accredited registrar or apply for a new accreditation.

Buying an existing Registrar

In reality in most cases you will actually not just be buying a registrar accreditation, but rather a company that is ICANN accredited. The price point is up to $30,000 USD for an offshore registrar, but we’ve seen prices under $10,000 USD recently. In most cases you will be operational faster than when going through a new registrar accreditation, but there are a number of other factors to consider. Most likely the registrar you will be buying is at least accredited for the COM & NET registries.

One time Cost:

  • $10,000 to $30,000 USD
  • plus reimbursement of any deposits/fees (registry credits)
  • Lawyer Fees
  • Possible Consultant Fees (about $2,500-$5,000 USD)

Pros:

  • If you are planning to have a retail presence, you may be starting out with some existing clients.
  • You don’t have to incorporate a new entity.

Cons:

  • Existing contracts may mean a delay before the registrar is yours and yours alone, for example if the registrar was used for drop-catching domains, there may be a 3 month notice needed in order to allow the drop catching registrar to attempt to move out their customers.
  • Depending on the responsiveness of the seller the sale may slow down as well.
  • Many registrars that are for sale are only set up to register a limited set of TLDs, so adding additional TLDs may be as time consuming as it is for a new accreditation.
  • Depending on where the company is registered you may have to change the jurisdiction of the company.
  • The registries may ask you to re certify and re-file paperwork such as credit applications once they are notified about the ownership change.
  • ICANN usually asks registrars with an ownership change to re-verify that the new owners meet all the requirements of the Registrar Accreditation Agreement (RAA).
  • You may have to continue to use the registrar system that the registrar has been using before, depending on your needs and existing contracts.

Recommendations:

  • Enlist a lawyer’s help to review the purchase contract.
  • Make sure the seller has provided you with all of the credentials & access for ICANN & the registries.
  • Ensure you are aware of any existing obligations contracts of the registrar, as well as any potential earnings.
  • Make sure that the registrar is in good standing with ICANN and all the registries and has been fulfilling all their requirements according to the RAA. Examples to watch out for here is for example the compliance with Registrar Data Escrow program.

Applying for a new registrar accreditation

One time Cost:

  • ICANN Application fee ($3,500 USD)
  • Possible Consultant Fees (usually from $6,000 to $10,000 USD)

It is important to note that there may

Considerations:

  • Proof of $70,000.00 USD working capital required (letter from bank etc.)
  • Commercial General Liability Insurance coverage of at least $500,000 (can be purchased from $500 USD & up)

Pros:

  • No existing registrants to worry about.
  • Starting from a clean slate, you don’t have to worry about the registrar’s history

Cons:

  • Accreditation process can be time consuming.
  • Time frame for the completion of the accreditation can be unpredictable, but can be as fast as under one month.

Recommendations:

  • Try to partner with a company that has gone through the process before and already has personal contacts at the registries and registrars.
  • Select your technology partner early in the process in order to ensure speedy completion of the registry signups and tests.

Leasing an existing Registrar

While this used to be a third option through an offering such as MyRebel.com (which appears to have been discontinued), we’re not aware of any current offerings allowing you to lease an existing registrar, but in order to be complete, I’ll still list our recommendations.

Cost:

  • Leasing a registrar does have a low initial setup fee.
  • The monthly cost, which includes access to a simple hosted registrar management interface, is about $1,500 USD per month.

Pros:

  • You can get started quickly without having to wait to change ownership on an existing registrar or needing to complete paperwork.
  • You have full access to the registry interfaces.
  • Any transaction is directly sent the registry, so you see the unfiltered registry response without any delay.
  • Since the service includes a hosted solution the service provider takes care of issues such as RDE, WDRP compliance and other code updates.

Cons:

  • The registrar is not owned by you.
  • You depend on the provider’s technical staff to provide you with access to your registrar.
  • You do not have control as to where the leased registrar is incorporated.

Conclusions and recommendations

If you are not in a huge rush to start using your ICANN accredited registrar, I would always recommend applying for a new accreditation rather than purchasing an existing registrar.

Disclaimer: DomainCocoon provides ICANN Accreditation Consulting, Frank Michlick is the founder of the company.

Can becoming an ICANN accredited Registrar save you money?

[Last Updated on Oct 27th, 2013]

Since many companies often mostly concentrate on the perceived cost savings of becoming an ICANN accredited registrar, we felt it would be a good idea to summarize the actual cost of maintaining an ICANN accredited registrar.

For smaller domain portfolio holders, this may actually not hold true – becoming an ICANN accredited registrar may initially increase the cost of holding the domains. However there are other advantages that should be taken into consideration, such as the improved security & control for your premium domain holdings held with your own registrar and even the right to participate a little more in ICANN politics.

One time fees due at the time of application

  • $3,500.00 USD non-refundable application fee (not considered in the financial exercise below)

Quarterly/Monthly Fees & Dues

  • Variable ICANN Fee, billed quarterly as set in the ICANN budget and divided by the number of registrars. For smaller registrars this fee usually ranges between $800 USD and $1,200.00 USD per quarter.
  • Fixed annual accreditation fee, $4,000.00 USD. These fees are first invoiced after your new registrar has become accredited.

Ongoing Cost

  • Registry Registration Fees per Domain Name Year (currently $7.85 for .COM)
  • Per Domain Name Year (registration, renewal, transfer) ICANN Fee (currently $0.18)

Other Considerations

  • ICANN requires the applicant to provide proof of at least $70,000.00 USD in working capital. (This amount does not need to be transferred to ICANN.)
  • ICANN required Commercial General Liability Insurance coverage of at least $500,000.
  • The individual registries may require additional pre-paid deposits and proof of available working capital.
  • The cost of licensing and running a registrar system.

In other words, your annual fees for maintaining most basic accreditation for just the COM gTLD are as follows:

  • $4,000 annual accreditation fee
  • $1,000 * 4 quarterly fee (mid-low range assumed)
  • ca. $1,000 commercial liability insurance (can be as low as $500)
  • Total $9,000.00 fixed cost per year

The base cost for a .COM domain name would be $7.85 + $0.18 ICANN fee, $8.03. Let’s assume that your current registrar charges you $9.00 per domain name year (including all fees), a difference of $0.97 of your base price. In order to get to the same price, you will have to process at least 9,279 (about $9,000 annual cost divided by $0.97) domain name years through your registrar to match the price of $9.00.

Please note that the actual number can be even higher, since this calculation does not include the cost of running a technology solution for an accredited registrar.

Registrar Data Escrow Deadline looming

Especially for those registrars that currently rent their Verisign Batch Pool connections to Drop-Catching systems such as Snapnames or eNom a looming deadline may have dropped of their radar screen. ICANN has now notified a number of registrars that has ignored previous requests to sign up for the Registrar Data Escrow program and will be naming some of the registrars publicly and may terminate them for non-compliance with the Registrar Accreditation Agreement (RAA).

The timing of the deadline is set individually on a per registrar basis and at this point mostly affects those registrars that had several extensions of the deadline before.

What is the Registrar Data Escrow Program?

Registrar Data Escrow (RDE for short) was established after Registerfly failed to be able to present registrant and domain ownership data for a number of domains under their management. Apparently the contact information for a large number of registrants had been lost and replaced with Registerfly’s own “whois privacy” information instead.

The RDE requires registrars to provide ICANN with contact information for all of the domains registered through their registrar on a regular basis in order to prevent difficulties should a registrar become non-operational.

Registrars need to sign up for RDE by signing a joint contract with ICANN and Iron Mountain, the escrow provider picked by ICANN or any other ICANN approved Escrow provider. Once that contract is approved, a sign-up form will need to be completed, encryption keys will need to be generated and then the data exports will need to be deposited.

Drop Catching Registrars and RDE

Most drop-catching registrars are either managed by eNom or Answerable/Logicboxes in the case of SnapNames.

eNom provides their registrar with an export of the RDE required data available via FTP. The registrar will then need to add any data for their own domains (if any) and encrypt & sign the data and provide it to Iron Mountain via Secure FTP.

LogicBoxes apparently offers the RDE participation at at a charge to the registrars using their system, but it may also be possible to extract the data from their system using API calls.

Not set up for RDE participation?

If you own a registrar and have received a letter of warning for your non-compliance with the RDE regulations from ICANN, act as quickly as possible in order to ensure compliance. If you need help setting the reports up, please make sure to contact your registrar operator or contact us if you need help. DomainCocoon can work with ICANN, Iron Mountain and your technical operator on your behalf in order to ensure compliance.