How to start a Hosting Company – Part 2
In part two of this series on how to start a hosting company, we are going to look at domain registration in more detail. Registring domain names for your clients is the first essential step that any hosting company must do in order to gain new clients. Fortunately, there are a few avenues you can take, but let’s quickly discuss how a domain name works.
What is a domain name?
According to Wikipedia the definition of a domain name is “A domain name is an identification string that defines a realm of administrative autonomy, authority or control within the Internet.” Essentially what this means is that a domain name is used as an identification mechanism in two ways.
1. It identifies the owner of a domain name.
When registering a domain name the company or individual is required to supply some basic contact information. This information identifies you as the owner of the domain name.
2. It identifies where the services for a domain resides.
The internet basically can be broken down into 2 parts. The website or email server that “serves” or delivers the website or email and DNS servers that identify where these servers are located. DNS servers play the role of identifying on what server the website or email for a domain resides. In other words which hosting provider renders the email or website services for a domain.
Now let’s look at how that happens on the internet. The servers, as with any device that connects to the internet has an address that is referred to as an “IP address” and consists of a set of numbers, each server IP address is unique and two devices cannot have the same IP address if they are connected to the internet. A domain name has different records and will point to different IP addresses. In other words, the website address of a domain name can point to one IP address and the email to another.
So the basic idea is that a domain name is easier for us humans to remember than an IP address. Imagine if domain names did not exist and in order to get to a website you would have to type a number into your browser, silly isn’t it.
So now that we understand the relationship between domain names and IP addresses, what is responsible for holding the domain records that we mentioned earlier? This is where DNS servers come in. DNS server or Domain Name Server holds the records for a domain, think of it as an address book.
When you visit a website or send an email the first port of call will be a DNS server. Your computer will ask the DNS server where the server is located that hosts the website or email and the DNS server will return the IP address of that server to your computer. Now that your computer knows the IP address of the server it will establish direct communication with the web/email server and ask it to serve the website or deliver an email.
How to register domains for your clients.
Domain name registrations are done through a registrar. In most cases, a hosting company would apply to be a registrar and to this, they approach the Top Level Domain registrar, however, this is out of reach of most startups as it requires a registration fee. But you have other avenues at your disposal. The easiest route would be to have a reseller account with a hosting provider. The downside to this is that you would pay the yearly registration fees for each domain at the price dictated by the hosting provider.
At Quickspace we sell domain names at cost price so you don’t have to carry additional cost over to your clients and impact your return. The second option is to register domains names directly with the TLD registrar. But once again they charge more compared to the cost price you would pay if you were registered with them.
Each domain name extension eg. .com, .net etc has a TLD registrar. Taking South Africa as an example our domain registrations (co.za, org.za, com.za etc..) are done by the ZA central registry (ZACR) You can register a co.za domain directly through them on what is called their legacy system. The yearly cost for .co.za domain name on the legacy system at the time of writing this article is R149.50. This is the simplest way to register a domain and it is done by sending a predefined email template with the domain details and making a deposit into their bank account. This method does require that you have at least two DNS servers at your disposal where you can publish the records for the domain, else the domains will not be accessible.
If you sign up with ZACR directly as a registrar instead of using the legacy system, then you pay the cost price per domain which is currently at R57.50. So you can see a definite saving of more than %70 on your bottom line. However to register with ZACR you need to comply with what they call their EPP registry. The EPP system would require that you do some development on your side to interact with the system to register domains and you need to go through their onboarding process, once approved there is a registration fee of R5000.
So it is not an easy entry point for a startup unless you have a developer at your disposal and some upfront capital. Thus the reason why Quickspace is bridging this gap and making it easier for you to enter the market by supplying domain registration services at the lowest possible price of R57.50 per year.
What is a DNS server and how does it work.
Eventually, you will outgrow a reseller account or if you register a domain directly with the TLD registrar you would require to setup DNS servers to host the records of the domain names. As explained earlier a DNS server is like an address book and holds the IP addresses where the services of the domains are hosted. To register domains you require a minimum of two DNS servers. This is for redundancy, if something goes wrong with the one server then the other is still available to deliver the records.
The TLD registry will hold the DNS server record entries of all domain. So when you visit a website, your computer will first query the TLD DNS server to find out where the hosting provider’s DNS servers are that hold the website records for a domain. Once your computer gets that info from the TLD DNS they can query the hosting provider’s DNS server to find out where the website is hosted and ask the website server to deliver the website to your computer.
Domain names are interesting because they actually work in reverse when queried. First, the domain extension is looked at, this means the part at the end of the domain name e.g. .com, .net etc.. Now that your computer knows you are trying to get to a .com website it will know that it needs to query the DNS records from the .com TLD registrar’s DNS servers. Then it looks at the next part of the domain which will be the name. In this way, it knows which queries to send to what DNS server. For instance, you could not query the records of a .com domain via ZARS DNS servers as they only serve records for co.za, net.za etc..
To summarize you would need either need to register domain names directly with a TLD registrar or work through a current hosting provider that offers reseller packages. Registring through TLD registrars has some cost implications and require DNS servers. There are some free DNS service providers that help you overcome this problem.
The easiest entry point would be to partner with Hosting Provider like Quickspace that can help you and already has all required services to get you started and as you mature you can move onto direct registrations with a TLD registrar.
We look forward to you joining us on our next article “Website Hosting”. If you missed our first article you can read up on the introduction here.