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In Russia, the Skype is Falling

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Here’s a disturbing piece of news courtesy of the Newsru.com Technology page. Disturbing not only because it portends yet more restrictions on the free flow of information in Russia on the heels of the recently implemented law permitting the organs to open mail (something they’ve always done before, of course, even without the blessing of the law), but also because of the identity of the instigator of this particular proposed restriction – the Russian Union of Industrialists and Entrepreneurs (also known by its Russian initials, RSPP).

Back when Mikhail Khodorkovsky was one of the leading figures in the RSPP, this organization was known as a staunch defender of the right to free enterprise without excessive state meddling. This all quickly changed with Khodorkovsky’s arrest in October 2003. The RSPP’s initial reaction was to voice its protest about the arrest to the power. Vladimir Putin refused to even meet with its leadership on the subject, quickly putting the RSPP in its place. Within a remarkably short few weeks, it had become obvious that the RSPP had no stomach to take on the power and had been completely cowed into submission, its members deciding that it would be best to meekly toe the party line in the hopes of not becoming the next Khodorkovsky.

Today’s RSPP has essentially become a loyalist oligarch’s club, its members eager to do whatever the power demands of them, including even statements by some about a willingness to simply give away everything they own to the Kremlin if ever the power honors them by making such a request. Even the RSPP’s statement described in the article below was carefully coordinated with The Party, in this case “United Russia” (note the incredibly Soviet-style language of the quotation from it!).

One of the most lucrative businesses in today’s Russia is cellular telephony. As anybody who has been in the country knows, everybody’s got a cellphone and is using it all the time. The country’s largest cellular providers are among the most profitable companies in Russia (Vimpelcom, MegaFon, and others). Rumor has it (surprise, surprise…) that Vladimir Putin and other regulatory officials own a hefty beneficial interest in one of them.

Naturally the rise of internet telephony obviously has the cellular oligarchs plenty worried. So worried, in fact, that they’re hoping the power will put the brake on progress and protectionistically restrict its development in order to keep their own lucrative cashflows safe and sound.

And the way they’re going about this shows that they’ve taken a page out of the power’s very own special business management textbook: The best way to eliminate a rival (see Khodorkovsky…) is to conflate, or, rather, hopelessly confuse, your own mercenary interests with some sort of vague “state interests”. In this case, to convince the state that the “real” reason to restrict internet telephony isn’t at all to protect the vested interests of cellular companies, but rather to shut down the only electronic means of communication left in Russia that (we hope) still isn’t being wiretapped. Wrap it all in nationalistic patriotic bunting, add a sinister allusion to tax evasion, and now you’ve got something the power can relate to!

From a wiretapping perspective, we’ve seen reports of most cell phone operators in Russia allowing the FSB to tap their switches, as have many internet email providers (and, as you can see from the article, everybody openly admits this as if though it’s the most normal thing in the world).  The idea of telephone privacy is not very developed given the country’s experience under Soviet rule, but the hard security approach makes for a much better-sounding excuse than something like, “Mommy, they’re eating away at my profits!”

Exclusive translation below, original source is Newsru.com:

In Russia they may restrict the development of Skype and internet telephony
23 July 2009

Raising concern for the Russian Union of Industrialists and Entrepreneurs (RSPP) is the active development of Skype and internet telephony in Russia. In the opinion of the RSPP, the rapid growth of the given segment of the communications market is infringing on the interests of cellular companies, reports the agency “Novy region”.

In connection with this, the “industrialists” have declared about the imperativeness of adopting corrections to legislation, which must protect mobile comminications operators.
In the opinion of the publication, the active actions of the RSPP in this direction could lead to a restriction of the development of Skype and internet telephony in Russia, and maybe even to their prohibition. One of the arguments, which, as they are hoping in the RSPP, will help them obtain the support of the power – now conversations with the use of Skype do not lend themselves to wiretapping.

Questions of the development of IP telephony in Russia were discussed by the commission on telecommunications and information technologies of the RSPP at a session on the formation of the legal foundations for the development of this segment of communications in the country. As a result, the commission came to the conclusion that IP telephony in Russia is not subjected to legal regulation, and that it is imperative that this be corrected.

The commission was in session on 21 July, and the corresponding material is on the RSPP website. As follows from the report, the commission for questions of industry and entrepreneurship of the presidium of the “United Russia” party could not be avoided. “It was unanimously recognized as strategically useful to organize the interaction of the two structures for the forming of common approaches to the resolution of the tasks of the sector for the benefit of consumers and the state”, – is said in the official report.

The position of the RSPP about legal regulating was supported by representatives of telecommunications companies. Thus, first deputy gendirector of the company “Megafon” Valery Yermakov declared that conversations via IP telephony are being conducted without any control on the part of the state. In particular, programs like Skype are not connected to the SORM telephone conversation wiretapping system.
Likewise businessmen note that “the majority of brands operating on the territory of the RF, ones such as Skype and Icq – are of foreign origin, and therefore it is imperative to ensure the protection of the domestic producer in this field”.

Besides that, representatives of cellular companies bring to the attention of officials that Skype earns in Russia and does not pay taxes here, does not invest itself into infrastructure. While users, notes Yermakov, should beware of providers of services who are not represented officially in Russia, their activity is not controlled, therefore the interests of subscribers are not protected.

There have been precedents of struggle with ip-telephony services in other countries, notes Gazeta.ru. Thus, in China they prohibited the use of ip-telephone, including also with the aid of the Skype program, for the reason that Skype services had begun to very actively attract the clients of state telephone companies, offering ordinary telephone communications.

Users of the iPhone from Canada likewise ran up against a prohibition on the use of Skype services, because, according to Canadian legislation, a communications operator must at any moment, with the objectives of safety, determine the place of location of a caller, while caller ID is not envisioned in an IP connection.

The two largest British cellular communications operators – Orange and O2 – this year turned to Nokia with a demand to get rid of Skype from new N97 devices, otherwise they would simply refuse to sell them. The majority of the operators in the USA likewise block calls via Skype through their network, leaving users only WiFi.

The big popularity of telephone calls through the internet has concerns the Italian police as well. The guardians of order are sounding the alarm: participants in criminal syndicates for their conversations are ever more actively using Skype, so as to confuse investigation. The encryption system used in this computer program is not being uncovered by developers, which strongly complicates the work of law-enforcement organs.

True, market specialists usually consider such behavior by the powers shortsighted.