FAS Russia is against price increases by operators and for network neutrality

Hello.

I planned to talk about this in the middle of the week, but the guys at Vedomosti unearthed the story a little earlier and wrote about it. Let me remind you that the Ministry of Digital Development approached the FAS with a proposal to change the ability for operators to increase communication prices. It was proposed that the maximum possible price increase be the inflation rate plus five percent. I believed and still believe that this is not just low, but damned little, and we need to raise prices more, but not for everyone, but selectively (the same promotional tariffs and the like). We talked about this in a separate article.

The second question to which the FAS gave its answer is the abolition of network neutrality; it is included in the concept of industry development until 2035. This is a harmful proposal made in favor of individual players who want to secure their position in the market and limit competition. My review of this can be read in the material criticizing the concept of industry development.

The FAS does not want to tie changes in communication prices even to the consumer price index in Russia; we have reached the point where the “protection” of citizens is reaching a fundamentally different level. As motivation, data for 2022 is cited, according to which operators increased prices at the rate of inflation, but at the same time invested several times less in the development of networks than a year earlier. The logic here is that operators put the surplus in their pockets and do nothing to develop networks, do not invest in them. The position is convenient, but it does not take into account a simple thing – in 2022, capital expenditure programs were revised due to the rising cost of equipment, the inability to buy it, only the essentials were purchased through parallel imports. And taking such an anomalous year as a starting point is at least strange. The attempt to mold operators into the image of greedy companies that are fattening on people’s money has not been surprising for a long time; many people perceive them this way and in no other way. Attempts to show reality with numbers in hand run into emotional statements in which people operate with their impressions. Like, as long as there are stars in advertising, they will do well. I have bad news. As soon as the advertising of operators disappears, you will all begin to live much worse, since this is money that goes, among other things, to the Russian economy. And the lack of this money will also indirectly worsen the situation. We have also talked many times about how ordinary people talk about operators’ costs and their economics.

Of course, it’s easier to think that operators are completely stunned and just want to make money out of thin air. It’s the easiest way. But the reality is that we are on the verge of the largest telecom crisis in Russia in many years, and the FAS is accelerating its onset. Today, operators can assure that they will make every effort to ensure that communication is available in all corners of the country where it is available. But the economy is such that they will not be able to fulfill their promises; the degradation of communications will begin in the next year and a half. The process will gain momentum gradually, it will not be immediate. By the time the government comes to its senses (FAS does not play a role here, populism comes from the government as well) and allows prices to change, it will be too late to fix everything – we will have to pay a lot more. It’s like when you’re renovating a house when your window starts leaking a little and you don’t do anything because you’re saving money. Then mold appears, and the cost of fixing this leak increases many times over. In telecom, we are on the verge of mold spreading across all networks without exception.

FAS is not an independent player; rather, we see here the game of many officials against telecom, since this is an advantageous position – protecting the interests of citizens. But it is imaginary, then we will have to pay many times more for this “protection”, prices will rise for all services and goods, it will be impossible to correct this and win back. We are tied to the mobile Internet and network coverage. And you can’t force operators to build networks out of thin air; they don’t have a magic wand.

Nobody wants to hear about price increases, which is understandable and understandable. And that’s okay! But if we talk about the future, then we are driving ourselves into a dead end. And here the work of the government and relevant departments is important, which must convey the whole picture. That if we don’t do this today, then tomorrow everything could be much worse. I am not exaggerating, because there is nowhere to thicken them, we are on the verge of the point of no return. I can talk about this endlessly, try to reach different people, but until the industry itself realizes that it is no longer possible to hide the obvious and pretend that everything is fine, we will not get anywhere.

Populism has created a misperception in society about operators who constantly raise prices, which causes irritation. But this is a problem of restrictions: the state keeps prices, and increases are possible once a year. And so operators will take advantage of every opportunity, although price changes remain unsatisfactory. And this gives us the impression of constant change. For the same housing and utility services, prices change by a larger percentage, but not as often. And this is also the wrong approach for telecom.

What lies ahead? Two very difficult years. 2024-2025 will be a test for telecom, the number of accidents on networks will increase (this is not the case now). Coverage will begin to decline and service availability will decline. Accidents will become a sign of the times, and it will be impossible to avoid them.

Do you know what’s the saddest thing about this story? The fact that there are practically no ordinary people who are aware of the impact of telecom on life in any aspect. And we are heading straight towards a situation where communication will not be accessible to everyone. The real solution to the situation of network congestion and failures will be to divide subscribers into groups based on service quality. The majority will receive the service on a residual basis in one form or another. That is, officials will provide themselves with high-quality communications at the expense of others, they will not worry about this. We will experience a price increase (it will happen anyway), but the quality of communication will be noticeably lower. Do you want this? Well, this is how everything goes, it won’t be any different. You will still lose, the question is under what conditions. You will pay a little more for communication, lose promotional tariffs from the past, or you will pay a lot and receive poor quality communication. The Ukrainianization of telecoms is in full swing today. Let me remind you that 4G was absent in Ukraine for many years due to the fact that communication was very cheap. Something similar is happening in Russia now. Whether this is good or bad is up to you to judge. In a couple of years, when you swear that you can’t comfortably use the Internet or that voice calls are failing, you will remember that you were warned about this. But it was important to save 50-100 rubles a month; they determine almost everything for you and create the basis for financial well-being. I have no more emotions, it seems that we are coming to a dead end in the development of telecoms.