Russian surveillance measures could cost telephone companies $156B: Report

Complying with new surveillance measures recently approved by Russian President Vladimir Putin may cost the nation’s telecommunication companies upwards of $156 billion — about 450 percent more than previously estimated — according to the CEO of a Moscow-based data storage company.

Included within a suite of security measures signed by Mr. Putin last month are new rules that will require telecoms to keep digital copies of their customers’ conversations for six months starting next year. While experts have previously estimated that companies will have to invest a total of about 2.2 trillion rubles ($34 billion) on the necessary eavesdropping equipment and storage space, Russia’s Kommersant newspaper on Friday put the actual cost at nearly five times that amount.

Denis Neshtun of data-storage company RCNTEC told the newspaper that Russia’s telecom can expect to spend a total of up to $156 billion, or 10 trillion rubes, on equipment and upkeep.

That price tag would likely shrink if the cost of digital storage does the same as expected, but would nonetheless impose a significant financial burden on the nation’s telecoms, he said.

Specifically, Kommersant reported that the sum will be needed to ensure Russian telephone companies are capable of recording about 107,142 gigabits of data each second, the likes of which will also need to be saved for a half-year on hard drives capable of storing several petabytes of digital information.

Additionally, Russia’s “Big Three” telecoms — Megafon, MTS and Vympelcom — will need to install about 565,000 different pieces of networking equipment ranging from switches and routers to firewalls, Kommersant reported. All three companies have spoken out against the surveillance requirements before, and the head of Megafon, the nation’s second-largest telecom, previously said he’d rather pay higher taxes to the government than spend an estimated $3 billion annually on infrastructure upgrades.

Moscow’s Vedomosti newspaper reported earlier this month that Russia’s Federal Security Service, the former KGB, may allow telecoms to use some of the government’s existing wiretap systems already in place. Even if that were to occur, however, current equipment would need to be upgraded to allow for the data storage requirements outlined under the anti-terror legislation, the paper reported.

Russia’s Ministry of Industry is expected to submit a proposal to Mr. Putin’s office on Sept. 1 outlining the expected cost of the surveillance effort, Kommersant reported.