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The Russian Internet Is Not Free. A New Tax Might Make It Even Worse.

Russians could soon find themselves paying a tax to access their favorite online content streams. Images mixed by Tetyana Lokot.

Russians could soon find themselves paying a tax to access their favorite online content streams. Images mixed by Tetyana Lokot.

History tells us that citizens usually don't respond well to new taxes imposed on them against their will (remember the Boston Tea Party?). When the Hungarian government recently tried to foist an Internet tax on its people, thousands of Hungarians rose up and went into the streets, showering the ruling party's headquarters with old computer parts.

You'd think other countries would learn from Hungary's example. But the Russian government is now considering its own variant of an Internet tax, and wants to make all Russian Internet users pay for consuming copyrighted content online.

Whereas the Hungarian authorities wanted to tax Internet traffic per gigabyte, the Russian idea, put forth by the Russian Union of Copyright Holders (RUC), is a blanket solution for ensuring all users are automatically charged for accessing copyrighted content on the web,  regardless of whether or not they're consuming it.

How It Would Work
A new concept known as “global licensing,” proposed by RUC in October, counts a wide variety of online audio, video and literary content as collective copyrighted property, and suggests that ISPs incorporate the tax into their tariffs. Although the concept has not yet become a draft bill, it already has a snazzy website that lobbies for the idea.

The Russian government is generally in favor of the Internet tax proposal and has appointed several ministries to collaborate on its implementation, but Leonid Levin, head of the parliamentary committee on information policy, has spoken out against the initiative.

RUC's head Sergey Fedotov, told Izvestia the tax would be 25 rubles ($0.35) per month for each web-enabled device.

Стоимость лицензии для одного подключения к интернету, будь то мобильный телефон или проводной интернет, составит 25 рублей в месяц, то есть 300 рублей в год. По имеющимся статистическим данным, это около пяти процентов от средних расходов каждого абонента на интернет.

The cost of a license for each Internet connection, whether it's a mobile phone or broadband Internet, would be 25 rubles per month, or 300 rubles per year. According to our statistics, this amounts to about 5% of what an average Russian Internet user pays for their Internet connection.

Twenty-five rubles (about USD $.40) may seem like a negligible sum, but between Russia's 130 million Internet users, it would add up to a significant sum—and one that would ultimately burden ISPs. Internet users themselves would not be paying the tax directly, but would instead incur the cost by “automatically” accepting a license agreement and a higher price for their Internet connection from their ISP of choice.

What Will Be Taxed
The “global license” is a unique licensing tool that, according to the Russian Ministry of Culture, will encompass “music tracks and recordings, audio-visual content and literary works.” Content produced by media and entertainment companies that is available online for free or is ad-supported would not be at issue here: rather, the tax would cover those kinds of media products that users would usually be expected to pay for, like a movie or a music album. But RUC suggests less common types of content, such as movie fragments shared online, might also be subject to taxation. In this respect, the new tax seems to be aimed at combating online piracy, as well as at generating revenue for right holders, adding to the existing anti-piracy legislation in Russia.

The Ministry of Culture later elaborated on the Internet tax idea, proposing to create a registry of copyrighted creative content online, making it easier to track consumption. The Ministry also suggested that ISPs should be obligated to install deep packet inspection (DPI) equipment in order to identify which content users consume on the RuNet. The DPI technology, Ministry officials say, will assure that the licensing tax revenue (which they estimate to reach $860 million a year) is fairly distributed among the copyright holders who own the rights to specific works.

The DPI technology specifications have already been developed for the Ministry of Culture by a local IT company called Systematic, RBK news agency reports. Systematic claims their technology will be able to recognize up to 90% of unencrypted traffic, but will not be able to analyze encrypted connections (like https) or torrent data transmission.

Given that most users who access pirated content online do so through torrent websites, use https, VPN protocols, or TOR to anonymize their connection, Russian telecommunication experts are skeptical about the effectiveness of the expensive technology suggested by global licensing enthusiasts.

RuNet Reaction
The Internet tax idea has met harsh criticism from Internet industry representatives, telecommunication providers, RuNet users, and even some government officials. Mobile Internet providers MTS, Megafon and Vimpelcom have spoken out against the concept of global licensing, and were joined by critical voices from the Ministry of Economic Development and the Ministry of Communications.

Representatives of several other IT companies, including Mail.Ru Group, Yandex and VKontakte, published an open letter addressed to President Putin on December 1, arguing that the new system would be “harmful for authors, copyright holders, users, the Russian Internet industry and the telecommunications business.” The companies’ representatives also expressed concern at the use of DPI technology to track users online, which they suggested was “a form of surveillance that violated international norms.” Forcing ISPs to install deep packet inspection equipment would only exacerbate existing surveillance and censorship mechanisms in Russia, like the SORM communications interception system and the IP-filtering used to block websites currently on the RuNet blacklist.

The RuNet users demonstrated their dismay at the Internet tax by launching an online petition on the Russian Civic Initiative website to collect signatures against what they called an “automatic anti-piracy fee” for all Internet users. The petition, started on December 6, calls state officials to drop the Internet tax idea and instead consider alternative means for protecting intellectual property, which would not violate citizens’ rights.

Большинству пользователей придётся платить за контент, который они не потребляют. Такие налоговые отчисления будут производиться не в интересах всего населения и даже не в интересах всех российских пользователей интернета, но в интересах ограниченной группы лиц. Кроме этого, не будет никакой гарантии того, что правообладатели действительно станут получать какие-либо отчисления с этого налога.

Most users would have to pay for content they do not consume. Such tax payments would not be made in the interests of all the citizens, and not in the interests of the RuNet users, but would only serve a limited group of people. Besides, there is no guarantee that the copyright holders would actually receive any royalties from this tax.

As of December 15, the petition had just over 14k of the 100k signatures that it needs to be considered for discussion in the relevant parliamentary committee.

If signed into law, the global licensing scheme would leave RuNet users no choice but to pay the Internet tax, as it would be included in their Internet bill. For now, the Ministry of Culture is still discussing RUC's proposal, but hopes to work with other stakeholders to create a draft bill by the end of 2014. An official within the Ministry alleged the discussion could even take a year or two. While this may seem far off, the recent track record of Russian Internet legislation suggests the Internet tax has every chance of becoming a reality.

  • AnthonyLook

    Putin continues his form of failed government Suicidalism.

  • mountain90

    No where internet is free. I’m a Vietnamese..

    on ap standa, on ap lioa, lioa, on ap

    • Guest

      Everywhere you pay a consumer fee for using Internet, but not taxes.

      • mountain90

        I see :) Thank! My English’s not good!!

        on ap standa, on ap lioa, lioa, on ap

      • Tryst46

        In the UK, they already tax it. However, the British people are so dumb, they just accept it along with all the other stealth taxes the country has seen in recent years.

        The BEST way to beat piracy is to reduce the price of things. There is no way on earth anyone can convince me that development costs of some software have created a price in the thousands of US Dollars range, yet it is sold at that price. Any wonder people pirate it? Dragon Dictate – $74.99, 3D Studio (pirated versions often used by games modders) – $3,765.00 (no joke).

        A game costs nearly 50 bucks so the people who would buy it, school kids mostly, can’t afford it out of their pocket money, the alternative is to download a pirate copy. Drop the price so the kids can afford them and you’ll reduce piracy considerably – and boost your own sales substantially at the same time.

        You will NEVER stop piracy, whether online or not. The best you can hope for is to make more money by reducing your price, thereby gaining more sales. If you can cut your price by 25% and double your sales, you’ve made more money than you did at the higher price. If people can’t afford it, they won’t buy it no matter how much you blame piracy for it. It’s not rocket science but greed is a powerful motivator for these corporate types who have no concept of supply and demand.

        In addition, most of the pirate copies of games etc are downloaded to see what the game is like FOR REAL. Demo’s always work, that’s their lure so, only a copy of the actual game will tell you if it’s worth buying or not. I have made that mistake, download a demo and bought the game on the strength of it, only to find the game was so bug ridden that it couldn’t be played. I have downloaded pirate copies of others because there wasn’t a demo, it was being marketed on the strength of it’s predecessors. I downloaded them only to find that they were a pile of garbage compared to the ones that came before. Red Alert was a classic example, the newest one was like a trip back to the 80’s where graphics were concerned, I have seen better graphics in a DOS game. Thief 4 was designed for console kiddies with all of the intuition and mystery of the previous Thief games taken out and key press hints put in to tell you what to do all the time, it was also impossible to be a real thief and ghost, (remain unseen, unheard and never caught), the missions from start to finish because you got caught so many times. Hitman Absolution – Unable to ghost the missions like you could in the predecessors but the game held your hand all the way through so it was far too easy. IMO, few games are actually worth buying these days.

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