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OTT-services asked Russian state duma to slow down consideration of new regulation for their business

The new draft law, providing regulation for OTT-services operating in Russia, caused many concerns of companies or persons who might be potentially affected by this regulation. Its requirements and mandatory provisions can destroy current business structure formed for the past few years, and not so many companies and their executives and owners are sure whether law-makers understand how their business works and whether they will pay attention to industry’s proposals.

Association “Internet Video” asked top persons of Russian state duma to slow down adoption of controversial draft law, providing regulation for operation of OTT-services in Russia. Some other market players have sent their thoughts in writing to Russian state duma. As letters have been received, it is supposed that law-makers should consider them very carefully and take into account all consequences of implementation proposed law in its current edition.

Initially legislative proposal has been developed by Russian Media-Communication Union (MKS), but later deputies from Russian state duma have introduced draft law regulating OTT-services in Russia. One of the cornerstones of this draft is 20% share available for ownership by overseas persons. The fact that audio-visual services have to register themselves in Roskomnadzor’s registry is not so harmful for industry. But they should verify content prior to upload or publish it. This measure can be a headache for these services.

Internet-companies, audio-visual services and professional experts claim the draft law does not address market realities and ignores business specific. It also undermines competition and burdens excessive restrictions on some Russian companies. For example, already mentioned provision about 20% share in company.

CEO of “Internet Video” believes this provision deprives video-services of funding sources. He also underlined that operators and media-holding companies, represented by MKS, occupy only 12% of online video market in Russian Internet. 70% of Russian market belong to independent online video services. Therefore the main purpose of proposed law is to make independent video services to sell themselves to major holdings on unprofitable conditions.

“Internet Video” proposed to Russian deputies another option of regulation. Under this option video-services would be regulated like news aggregators. The law for news aggregators defines aggregator, regulates certain types of its activity and obliges aggregator to run its business through Russian legal entity. Overseas companies, already established in many other countries, can make competition in Russian market more “complicated” for some Russian companies.

Governmental experts gave negative conclusion after analyse of proposed draft law. In order to comply with 20% share requirement transnational companies would reduce their share in Russian online video services or leave the Russian market. They also could ignore this provision, but in that case the video-services can be forbidden in Russia at all. They believe this draft law is an attempt to monopolise online video market by companies holding only 12% thereof.