[registrars] drop pool registrars

[Rick Wesson <wessorh@xxxxxx>]

Registrars:


Several months back I sent in an accreditation request to ICANN to
accredit a new entity. There was soo much commotion about the drop-pool
and how much ICANN was going to make off the registrars participating in
it. It looks like alot of folks did what I did and created a new entity
and sent in the accreditation paperwork.

ICANN sat on my accreditation which they received August 5th and just
yesterday, after a flurry of e-mail, announced that my application was
almost complete. I just had a few minor hoops to jump through.

I then poked veriSign and inquired how long it would take to become
operational -- Well the "word" is that I'm looking at near "the end of the
year" which in my mind means something like Jan 2005 or some 3 to 4 months
from now. VeriSign stated that they are processing 5-10 applications per
week, meaning there are some 60-120 registrars in front of my
accreditation.

The business decision is easy, game over. There is little incentive for
creating a registrar that becomes operational in '05 with the batch-pool
fees set as they are. This is not a big deal its nearly the end of the
registrar boom cycle.

the down side is that its be beginning of the registrar bust cycle, and
ICANN's mandate for a stable DNS will be tested over this period. Let me
reiterate the bust is for the little guy not the big fish, they will just
pick up the registrants of the little failures that we will see.

First the drop-pool revenue will decrease as Network Solutions and 2Cows
implement their new auction models thus draining the number of available
names for the various auction houses. the registrar that thrives of this
as a majority of their income will start to have issues.

As the new fee structure hits in '05 we will see registrars faced with a
13K initial outlay for their 1st quarter ICANN fees (plus $.25 per
transaction)

If you are not going to clear $13K in Jan-Mar '05 then you will rethink
your accreditation. I expect to see about 75 registrars request to be
decredited by June 2005.

As the cost of accreditation meets then exceeds the revenue that one can
obtain by participating in a drop pool I expect a lot of these registrars
will leave the club. This will increase the amount each registrar pays of
the 3.8 Million in increased fees.

By years end the increased burden on small registrars by the exit of the
batch-pool-only registrars should significantly hurt the viability of most
small and mid-sized registrars.

If ICANN is able to pick up the pieces the industry will probably continue
on healthy, having the large registrars pick up registrants from some 150
small and mid sized registrars businesses will help their bottom line and
create new barriers to entry.

The big questions is can just a few large registrars bare the entirety of
the 3.8M registrar fees? Well, they don't have to. No registrar will pay
more than 20K in ICANN fees, which will leave ICANN in worse shape.

If you believe that ICANN was sufficiently staffed for its mandate -- we
will test this and many other things as we witness the first real full
business cycle in our industry.

now, I'm going to tell ICANN that they can stuff my application for
accreditation and I'm not going to make it operational. Anyone need an
accreditation, its in-queue with a 90 day ETA -- just name your price =)

-rick

ps I'm often wrong -- but, your mileage will vary.