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. Last Updated: 07/27/2016

State to Take 3% of Phone Companies' Revenues

The government is expected to collect around 3 percent of telephone companies' monthly revenues to finance loss-making public services such as village pay phones, an adviser to the communications minister said.

"The ministry at one point recommended setting the fee at 3 percent," Anatoly Plekhanov, adviser to Communications Minister Leonid Reiman, said in written answers to questions.

"By all appearances, the actual size of the payment will be based on this figure."

Plekhanov was commenting on a new law on telecommunications that requires all phone companies to pay a percentage of their revenue into a fund to compensate operators who supply loss-making services.

The government is expected to levy the fee starting in 2005.

"There isn't a single static figure on the size of the fund," Plekhanov said. "It is clear that solving the problem of universal service, the installation of pay phones and public access points will depend on how much money we collect."

The controversial universal service provision in the law, passed by parliament in June, is meant to provide a lifeline to more than 50,000 villages in Russia that lack any fixed phone service -- some of them only a few hours' drive outside Moscow.

The law requires pay phones with free access to emergency services to be reachable on foot within an hour from any settlement. Internet access must be available in any town of more than 500 people.

Opponents in parliament, however, protested that social services are the government's responsibility, not the operators' and should be financed from the state budget through taxes.

Operators are benefitting from a few years of strong market growth and this year's demise of the turnover tax. They are now generating healthier cash flows and investors fear a high universal service fee would pare back gains.