[DNS] Roles of registries, registrars, and resellers - and impact on dr aft registrars agreement and code of conduct

[DNS] Roles of registries, registrars, and resellers - and impact on dr aft registrars agreement and code of conduct

From: Bruce Tonkin <Bruce.Tonkin§melbourneit.com.au>
Date: Wed, 17 Oct 2001 16:05:40 +1000
Following the public meeting last week on the 5 October 2001, there were
some misunderstandings about the role of registries, registrars and
resellers in the market.

This submission is based on the experience in the international market for
".com" domain names, and provides some clarification of the roles of
registries, registrars and resellers.

In both the ".com" competition model and also in the new ".au" competition
model the registry provides the database infrastructure.  Registrars have
direct access to the registry via a low level protocol.  This means that
registrars can directly create new domain names, and these immediately
become available to the Internet as a whole.  Thus it is important for auDA
to have a stringent accreditation test of the registrars and licence these
registrars, as their direct access to the registry has the potential to
affect the stability of the Internet in Australia.

Some registrars may choose to operate entirely as a retail operation, with
sales direct to consumers.  Other registrars may choose to primarily provide
back-end technical services to resellers.  The registrars that compete for
the business of resellers aim to provide a back-end technical service for
interfacing with one or more registries at a cost below what the reseller
could do itself.  The business model here is that a specialist registrar can
use economies of scale to provide the technical registration services at a
lower cost than most other companies.  In the ".com" market, the market for
providing these services is very competitive, and the wholesale price
available from a registrar for large numbers of names is very close to the
price charged for domain names at the registry.  In fact it is larger
companies that often choose to be resellers (even after they have passed the
accreditation process managed by ICANN), rather than registrars, due to the
excellent pricing they are able to get from operational registrars.   To use
an analogy, a large organisation like an Australian bank or Qantas could
choose to build their own telecommunications network, but they are able to
use their buying power to get very competitive telecommunications prices.
It is the smaller companies that do not have such buying power that often
decide to become accredited registrars.  In the ".com" environment, many of
the large resellers are multi-national telecommunications companies or
Internet Service Providers, so they have the technical capacity to operate
as registrars but choose to allocate their resources to other areas of their
operations.  Most consumers that operate ecommerce Websites, tend to use
these large resellers as their agents to facilitate obtaining a domain name
and establishing a website.

Registrars compete to provide services to resellers on both price and
service.   The registrars provide for a large diversity of options for
resellers to use to forward domain name requests to the registrar and
through to the registry.  These interfaces include email templates, http
post interfaces, and websites that can be customised for the branding of
particular resellers.  Some registrars also provide customised interfaces
for large resellers to allow full integration with their existing
information technology environment.  Thus the concerns over whether using
EPP at the registry could limit the ability for companies to compete in the
market are unfounded.  It is better to provide a powerful and flexible
protocol at the interface between the registry and registrars, and then let
registrars innovate to provide a much larger range of interface options for
resellers (including support for different languages).  The registrars will
use low prices and high quality electronic interfaces to try to encourage
more companies to enter the market as resellers, and thus further encourage
retail competition.

Competition under the new model thus occurs at three main levels:
(1) Consumer/retail - registrars and resellers compete against each other -
probably over 1000 companies in Australia in future (currently around 500
exist)
(2) Registrar wholesale - registrars compete to provide services to
resellers and increase the number of resellers - probably around 10-50
registrars in Australia in future
(3) Registry wholesale - registries compete to provide services to
registrars - probably around 100 major companies worldwide (including those
providing ".au", "info", ".com", ".biz", ".co.uk", ".de", ".jp" etc)

In the ".com" market, the top 10 domain name registrars account for 87% of
the total market, and most of these top ten companies achieve scale through
providing services to either large resellers or large numbers of small
resellers.  A large percentage of retail sales is via resellers rather than
registrars selling direct to consumers.  In the ".com" market there are
around 80 operational ICANN accredited registrars, and around 80 ICANN
accredited registrars that choose to remain as resellers.  There are
presumably tens of thousands of resellers of ".com" globally.

auDA should take the likely industry structure into account in the
development of the registrar agreement.  Note that resellers are normally
viewed by registrars as agents for consumers, rather than agents of the
registrar.  Resellers sometimes split their business between multiple
registrars (just as large companies use multiple telecommunications
providers to allow some risk management and also encourage more price
competition)
Consumers also primarily interact with the reseller rather than the back-end
registrar (just as a consumer interacts with a supermarket rather than the
trucking companies that supply goods to the supermarket).  Thus consumers
also view resellers as their agents rather than registrars.

Given the structure of the industry, auDA needs to encourage participation
from the retail domain name industry as a whole (ie registrars and
resellers).  auDA should encourage more resellers to become supply side
members of auDA, and auDA should encourage resellers as well as registrars
to work with auDA to develop a suitable industry code of conduct.

Regards,
Bruce Tonkin

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Received on Wed Oct 17 2001 - 06:16:02 UTC

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