Putin’s ‘Big Brother’ Surveillance Law Criticized by Snowden

  • Operators told to store phone, internet records for six months
  • Implementation costs may reach more than $30 billion

Russian President Vladimir Putin signed an anti-terror law criticized for eroding civil-liberties as well as the coffers of telephone carriers, who may have to spend an estimated $30 billion plus to implement it.

The law compels Russia’s phone companies to keep recordings of users’ calls and internet activity for six months. The government will establish the precise requirements of the law, according to the Kremlin website

Putin, facing parliamentary elections in September as the nation endures the longest recession in two decades, has been increasingly cracking down on dissent. This latest action, dubbed the Big Brother law, sparked broad criticism, including from former security contractor Edward Snowden, who’s received asylum in Russia after leaking U.S. secrets.

"Signing the Big Brother law must be condemned," Snowden said on his Twitter account. "Beyond political and constitution consequences, it is also a $33 billion tax on Russia’s internet."

Social media played a major role in the organization of mass protests following accusations of fraud in 2011 elections, the biggest unrest since the Russian leader came to power more than 16 years ago.

“Putting aside the ethics, morale and philosophy of these amendments, operators will need to make huge investments into new infrastructure which does not exist at the moment,” Egor Fedorov, an analyst of ING Bank, said in a note. MegaFon PJSC’s estimates of the cost of buying equipment and building data centers amounts to half of its current market value, he said.

Mobile TeleSystems PJSC lost 1.8 percent in Moscow trading and MegaFon slid 1.2 percent. VimpelCom rose 0.3 percent to $4 in New York at 11:12 a.m.

Security Costs

It’s strange for the state to shift responsibility for security to private companies, MegaFon Chief Executive Officer Sergey Soldatenkov told newspaper Kommersant in an interview published Thursday. Imposing an additional 1 percent tax on carriers’ revenue and using the funds to implement a surveillance system would make more sense, he said.

The telecommunications companies may get a reprieve before the law comes into effect from July 2018, ING Bank’s Fedorov said.

“We don’t believe that requirements for the operators will come into effect as they stand now,” Fedorov wrote. “We see some trade-off between the state and operators to significantly reduce currently implied capex.”

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