Why .ZA domains are getting more expensive

The ZA Domain Name Authority (ZADNA) resolved at a board meeting on 28 August 2020 to increase the wholesale fee of co.za, org.za, web.za, and net.za domain registrations by R10 per year from 1 April 2021.

Only the prices of domains registered through the Extensible Provisioning Protocol (EPP) system administered by the ZA Central Registry (ZACR) will increase — from R45 per year to R55 per year (excluding VAT).

Prices of domains registered through the ZACR’s legacy system, which is more expensive than the EPP system, will remain unchanged.

ZADNA’s announcement of the pending wholesale price hikes follows public consultations regarding the matter.

Some registrars and domain name owners registered objections to the proposed price increase, asking for greater transparency from the ZACR regarding how the additional funds will be used, and arguing that the ZACR should look into operational efficiency before asking for a price hike.

To understand the objections raised, it is necessary to understand the relationship between ZADNA, the ZACR, and its service provider Domain Name Services (Pty.) Ltd.

ZADNA, ZACR, and DNS

ZADNA is the statutory regulator and manager of the .ZA namespace. It currently charges the ZACR R12 per domain per year.

ZADNA increased its price from R7 to R12 per domain from 1 June 2016, causing a major dispute between itself and the ZACR.

Several industry players pointed out that ZADNA had provided commitments that it would not increase its fees until at least 2017, but ZADNA argued that the commitment did not extend to the fees it charges the ZACR, only the fees the ZACR charges to registrars.

ZADNA approved a wholesale EPP price increase from R35 to R45 per year on second-level .ZA domains (i.e. co.za, org.za, web.za, and net.za) in November 2014. It promised to avoid a fee increase for at least 3 years – unless drastic circumstances justified a change.

The dispute between ZADNA and the ZACR was resolved by a settlement agreement. Under the terms of the agreement, the ZACR now pays the increased fee of R12 per domain to ZADNA and it also agreed to back-pay a portion of the increased domain registrations fees to 1 June 2016.

The ZACR has therefore been charging a wholesale fee of R45 per year on domains for nearly six years, while the annual fees it pays ZADNA increased from R7 to R12 per domain.

Domain Name Services (Pty.) Ltd., also known as DNS, is a service provider to the ZACR that provides the technical systems for managing South Africa’s second-level .ZA domains, .capetown, .durban, .joburg, and .africa.

.ZA domain wholesale prices (EPP)
Fee / Year 2012 2015 2016 2021
ZADNA-ZACR fee (Registry Fee)
R7.00 R7.00 R12.00* R12.00
ZACR EPP wholesale fee (Wholesale Fee)
R35.00 R45.00 R45.00 R55.00
* ZACR disputed ZADNA’s wholesale price increase in 2016. The companies settled the matter in 2019.

Increase is essential for the sustainability of .ZA – ZADNA

ZADNA told MyBroadband that the wholesale EPP increase of R10 per domain is essential for the sustainability of the .ZA namespace.

“The Wholesale fee is vital for the .ZA domain namespace security and development thereof, as it is evident through the implementation of DNSSEC and now data escrow services which will ensure our ccTLD will be resilient,”. ZADNA stated.

It also noted that it has not increased the fee for five years.

MyBroadand pointed out that ZADNA did increase its annual fees to the ZACR in 2016 by R5 per domain, and asked whether that increase wouldn’t naturally have led to a wholesale price increase anyway.

According to ZADNA, the fee increases have nothing to do with one another.

“A Registry Fee increase does not translate to a [Wholesale Fee increase] and it does not precede the EPP Wholesale fee, more so, the focus here should be on the EPP Wholesale Fee and the Authority’s pronouncement.”

Why does the ZACR need a wholesale fee increase?

“.ZA-managed domain name pricing has remained stagnant for the past 5 years due to a moratorium being in place from March 2015 until March 2019,” a spokesperson for the ZACR told MyBroadband.

“This directly impacted on the Registry’s ability to continue providing innovative, robust, resilient and secure registry services, as external factors like inflation and currency fluctuations are generally not sympathetic on any commercial entities’ operational capabilities.”

The ZACR stated that given the critical role that a domain name plays within the Internet value chain and the economy at large, it is important for ZACR to ensure that there is 100% uptime of registry services.

“This is an internationally benchmarked performance level and attracts operational costs, like any other business that wants to offer excellent service offerings.”

What the additional income from second-level .ZA domains will be used for

According to the DNS website, there are currently 1,313,438 second-level .ZA domains registered.

While ZADNA has increased its fee to the ZACR by R5 per domain per year, it has also approved a wholesale EPP price increase of R10 per domain.

This means that when you subtract the extra money going to ZADNA, the ZACR will generate an additional R6,567,190 per year. What will this money be used for?

“ZACR is a not-for-profit entity tasked with the management of critical domain name infrastructure, thus all of its funds are utilised towards ensuring that the Registry functions optimally,” the ZACR told MyBroadband.

“Apart from investing in critical registry infrastructure (hardware), building and maintaining a buffer to respond to disaster management and business continuity obligations timeously, the ZACR believes that it is extremely important to also contribute to the development of new and emerging channel partners (Accredited Registrars) so that they are better equipped to offer quality-driven domain name services.”

The ZACR said that it has supported industry-related programs like Basic and Advanced DNS Training and Coachlab initiatives in the past, but these suffered as a direct result of the moratorium on price increases being in place.

“ZACR would like to reinstate these enterprise development programmes as part of its efforts to transform the domain name sector.”

Delaying the price increase until South Africa’s economy starts recovering

Asked whether it wasn’t possible to defer a price increase until South Africa’s economy will hopefully be on a path to recovery, the ZACR said that this was already taken into account.

“We have it on good authority from ZADNA that the date on which the EPP Registrar price adjustment comes into effect (1 April 2021), eight months after the decision to do so was taken, was definitely informed by the impact of COVID-19 pandemic conditions and the need to allow the SA economy to restore itself,” the ZACR stated.

“It is also important to note that even with this increment in sight, our .ZA-managed domain names remain competitively priced and still cheaper when compared to domain name pricing strategies applied in other similarly placed country code top-level domain name extensions and generic top-level domain name environments.”

Now read: .ZA domain gets major security upgrade

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Why .ZA domains are getting more expensive