Russian telcos lobbying for OTT tax on new data storage laws

Russian telco industry is jointly considering to propose the Government a new legislation to assist them in bearing the P&L impact of the new law that comes in effect this October 2018 bounding them to store customer data in the country for a period of six months after the data being generated.
Some observators mentioned that Russian telecoms operators still do not have the necessary infrastructure in place to store users’ data as law requires, and the sector highlights that the new law will likely force them to increase user tariffs in as much as a 10%.
The underlying proposal, if delivered to the Government, might suggest that they collect an over the top tax from the foreign internet companies.

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There is not enough information about the mechanics of the proposal to make a tax policy evaluation on it, or if it is really a tax at all, but this would be another dimension of the “Level the Playing Field” conversation, aside of the impact of tax contributions in market competition and the digital economy taxation one.

Any regulation imposing restrictions on the data flows will undermine innovation and affect growth and foreign investment. International organizations mention that OTT providers are lately keener to invest in infrastructure devoted to bringing content to the net edge and reduce latency. OECD has suggested in recent reports that consumers could be more willing to pay to upgrade their internet connection creating a “virtuous cycle” between OTT access, consumer use, and infrastructure investment.
Interestingly, commentators mention that in Russia the operators would have to use foreign technology to comply with the upcoming data storage law, even though President Putin requested that local companies can produce the equipment.

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