Russian federal officials want mobile operators to spend billions to switch to FSB-approved SIM cards

Russia’s Communications Ministry wants to use anti-terrorist legislation to force mobile communications providers to install FSB-certified cryptographic protections on SIM cards, possibly costing the industry tens of billions of rubles. According to the agency’s proposal, mobile operators would need to switch to new SIM cards and then start replacing customers’ SIM cards once every 15 months. Russian telecoms currently buy their SIM cards from two companies based abroad, which has raised concerns that they might hand over the keys to their future cryptographic protections to foreign intelligence agencies.

The company VimpelCom estimates that implementing the Communication Ministry’s proposal would cost more than 5 billion rubles ($74.1 million). Federal officials say the new program would require mobile operators to buy 80 new pieces of equipment, each cryptographic device costing 3.2 million rubles ($47,500). MegaFon, however, says it would need one of these devices for every 10,000 customers. With roughly 260 million mobile service subscribers in Russia, this would raise the hardware costs to 83.2 billion rubles ($1.2 billion), according to the newspaper Kommersant.

• There are no working cryptographic protection systems in Russia’s mobile service market today. According to various estimates, it would take between 10 months and two years to develop this infrastructure.
• The Communications Ministry submitted its proposal to the Justice Ministry on August 3, but it was returned to the agency on August 15 for revisions, at the request of Russia’s Economic Development Ministry.