I came across a news item on Mosnews.com, a Moscow-based online daily newspaper offering news from Russia in English. The article dealt with the threat of regulation being faced by Russia’s fast-growing VoIP industry. I’ve excerpted the opening of the article as well as the letter written to Russian President Putin.

If nothing else, this article underscores the fact that in global terms, VoIP can still be subject to the kind of stifling regulation that threatens to drive the technology “underground.” And “underground” is not a word any of us should want to hear around any discussions regarding Russia these days.

Here’s the excerpt:
Internet telephony (VoIP, or voice over IP) has been a hot topic in Russia since the end of the last century. Thousands of new and relatively small companies are competing on this market, filling the gap left by obsolete telecom monopolies, whose standing, thinking and much of their infrastructure, is largely inherited from the Soviet era. It’s hardly surprising that Russians, businesses and individuals alike, spend billions of rubles annually on VoIP services, instead of using overpriced and obsolete national and international connections, offered by old-fashioned telecom mammoths.

So far those mammoths have been quietly ignoring the trend, but lately their attention had been drawn to the phenomenon, and their first reaction was to outlaw the local VoIP market outright, pulling the usual strings of state bureaucracy. The industry made a faint attempt at striking back, sending an open letter to President Putin.

 Respected Vladimir Vladimirovich,

The participants of the Russian Internet Forum and representatives of Russia’s small and medium businesses are applying to you to express their deepest concern with the future of the communications market. One of the main telecommunication market trends is the convergence of voice, video and data within a single multi-service IP-based network. Nowadays about 30% of international voice traffic is transmitted by means of IP networks worldwide.

The main problem that the VoIP industry of Russia has to face is regulation. The state regulators of Western Europe and the USA see stimulating new technologies as a priority and support the development of VoIP as the main revolutionary technology on the market. At the same time, the instructions designed by the Ministry of Information of Russia and approved by a governmental resolution on 28.03.2005, actually prohibit the provision of VoIP services, forcing operators to turn the traffic towards national and international telecom companies.

The business of more than 2,000 Russian VoIP operators with a total turnover of about $300 million PA has been proclaimed illegal and forced to shift to unauthorized — that is, tax-free — schemes of work. Legislation to turn market traffic towards national and international telecom companies is a serious violation of the principle of free competition and is, in fact, a monopolization of the telecom market in favor of one or two major companies. The instructions were designed by the Ministry neglecting the opinions of the market participants and without an independent analysis.