Russia forces small ISPs to sell networks to federal giants if license is revoked

Russia's Ministry of Digital Development is preparing a sweeping reform of the telecommunications industry that includes a mechanism to forcibly transfer equipment from operators who lose their licenses to federal-level providers. The news was reported by Kommersant, citing the ministry's presentation materials.

Under the proposed rules, any operator with more than 3,000 subscribers will be required to sign a contract with a federal provider. This contract grants the federal player a priority right to purchase the network infrastructure if the operator's license is revoked. If an operator refuses to sign such an agreement, the ministry will issue a demand to cease providing communication services. Those who lose their licenses may still receive compensation for their costs and mandatory contributions, provided they submit an economic justification.

The reform also introduces a three-tier licensing system: a basic license for cable television, a universal license for broadband internet access, and a general license for nationwide communication services. Individual entrepreneurs will be stripped of the right to offer communication services altogether. According to the ministry's estimates, roughly one-third of all current providers will fail to meet the new regulatory requirements and will be forced to exit the market.

The five largest providers in Russia already control 70% of the consumer broadband market, according to TMT Consulting. The Ministry of Digital Development explained that the proposed changes are designed to ensure that only reliable companies — those motivated to deliver quality service and capable of investing in network modernization — remain on the market. The ministry believes that consolidating the industry around federal players will improve service reliability and infrastructure resilience, especially in regions where small operators have struggled to maintain quality. Critics, however, warn that the reform could reduce competition and lead to higher prices for end users, as smaller local providers are often the only option in remote or less profitable areas. The final version of the bill is expected to be submitted for public discussion later this year.