A few years ago, DNSimple went through the process of gaining ICANN accreditation, but we've never written about it or why it has value. In this post, I'd like to take a look at what ICANN is and why their accreditation is so important.
If you haven't read our post on the three R's of domain names, you may want to as this post is all about registrars, but talks about the other two R's (registries and registrants) without getting into what they are.
What is ICANN?
The Internet Corporation for Assigned Names and Numbers (ICANN) was established back in 1998 as a non-profit organization responsible for the management of the domain name system (DNS).
Since it formulates and imposes Internet domain policies, rules, and regulations, ICANN plays a crucial role in the operation and maintenance of the Internet. In other words, ICANN oversees the internet. Among ICANN's duties are included coordinating the operation of root name servers, dealing with registries to manage top level domains, and the distribution of IP addresses.
For the purposes of this post though, the role of ICANN that we care about is the accreditation and supervision of domain name registrars. Through this process, it authorizes independent organizations to provide domain name registration to registrants.
Technically speaking, it's entirely possible for anyone who's really interested to become a registrar. In fact, gaining ICANN accreditation is not actually necessary because it is possible to resell domains through other organizations.
This is actually the way that we sell domains to this day, but in the interest of establishing a stronger business and to provide future flexibility, we decided to go through the process of ICANN accreditation a few years ago.
The process of becoming an ICANN-accredited registrar is renowned for its complexity. It usually takes a lot of time, money, and effort to meet the standards that ICANN requires. This is because a large part of the process is about determining the long term viability of the company in order to guarantee the stability of the whole internet.
Having the possibility of thousands of domain names just disappear because the registrar responsible for them became insolvent isn't a great way to build a system, so accreditation is one way ICANN works against that possibility.
When a registrar applies for accreditation, it goes through various checks and evaluations conducted by ICANN. One of the first checks is related to proving the financial stability of the company. The registrar has to reassure ICANN that the risk of business failure is brought to a minimum. It also needs to prove that it has provided adequate protection if anything goes wrong.
Registrar applicants should be ready to pay some costs related to their ICANN accreditation. First, they need to pay a non-refundable application fee of $3,500. If their application gets approved, they have to pay a $4,000 yearly accreditation fee. As long as they want to be accredited, they have to pay this fee again each year.
The next financial obligation is the quarterly variable fee. Registrars need to pay it as soon as they start registering domain names, or when the first full quarter of their accreditation passes. The quarterly fee serves to cover a portion of the operating costs of ICANN. This fee is divided among all accredited registrars, thus the amount that each registrar has to pay varies based on the number of registrars in a particular quarter.
Another obligatory fee that accredited registrars pay is a transaction-based gTLD fee to pay for the new expansion of top level domains available for registration. This is a flat quarterly fee, which is charged for each new domain name registration, renewal, or transfer.
When ICANN gives accreditation to a registrar, it serves as a quality stamp. Therefore, things don't end with the approval of the accreditation application. The rights and obligations of both ICANN and the accredited registrars are governed by individual Registrar Accreditation Agreements (RAA). Accredited registrars need to sign a few more agreements with ICANN which define various aspects of their cooperation.
All accredited registrars are constantly monitored by ICANN. They need to keep a certain level of service quality and perform within the ICANN guidelines. Registrars need to meet all the technical, operational and financial criteria necessary to qualify as a registrar business at all times.
What do registrars get with ICANN accreditation?
With all of the fees and complexity, you might be wondering why anyone, including us, would want to go through this process. There are a host of reasons, but largely, the accreditation process allows a greater deal of freedom in how the registrar can deal with registries and permits the registrar to set their own prices on domain name registrations. Having accreditation and direct access to registries also means a registrar can guarantee better quality service to their customers.
While we haven't yet integrated with registries directly, we still maintain our accreditation and have our ICANN agreements available on our site. If you have any questions about this post or these topics, let us know!