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President of Russia Vladimir Putin: Mr Nikiforov, what good news do you have for me?

Communications and Mass Media Minister Nikolai Nikiforov: Mr President, the Ministry is working systematically in all areas to develop communications. The biggest project underway at the moment is the construction of fibre-optic communications lines. It is no exaggeration to say that this is the biggest project in the world – we will build up to 200,000 kilometres of fibre-optic communications lines and will connect all towns with population of more than 250 people.

Vladimir Putin: So what stage are you at now?

Nikolai Nikiforov: We will start the actual construction work next year. Right now, we are carrying out the project development work, which involves a lot of preparation. We are working individually with each region. This will create the infrastructure base that will make it possible to then develop in systemic fashion our country’s information technologies.

Of course, I must add here that many state clients and businesses in Russia today are quite concerned about the situation emerging in the information technology sector. Most worrying are the monopolies held by particular countries and companies – there are just a few – in the information technology sector. The unprecedented revelation that some countries’ intelligence agencies were illegally collecting data on hundreds of millions of internet users played a big part here.

At the same time, a number of companies here have been turned down for supplies of high-tech computer equipment and updated software, and clients here are certainly becoming choosier now and are looking for alternatives, including from domestic producers. But at the same time, we see that…

Vladimir Putin: Sorry, could you tell me what alternatives we have here? Do we have something to offer?

Nikolai Nikiforov: No one in the world can offer a complete alternative right at the moment, this is why the global community is so worried about the monopolies. After all, it is this monopolism that has created problems for hundreds of millions of users and for various companies all around the world.

We therefore need to develop a comprehensive programme that would make it possible to support Russian software producers to step by step and year after year develop the needed range of products that will – if I may use this term – guarantee the information sovereignty of Russia and our friendly partner countries, which are also interested in the solutions we come up with.

Some people think that developing software is a piece of cake, something a few students can take care of, but if we’re talking about an industry-centred approach, work for export markets and work in the corporate sector, it is a very labour-intensive process all in all and similar really to designing and manufacturing modern aircraft.

If you take the example of the kind of mobile operating system that tens of millions of people use on their phones, their smartphones these days, the labour that goes into a product like this is equivalent to 5,000 engineers working on its development over a period of roughly 5 years. There can’t be any shortcuts. Companies therefore need the conditions that will allow them to spend 5–7 years working step by step on these developments, and this of course requires funding sources and various forms of support.

One possible form of support could be to create a separate targeted fund for Russian software development. This fund could be modelled on the similar fund that was set up to help us carry out the huge fibre-optic project. That fund collects 1.2 percent of all spending on communications services in the country.

In the area of software development, we have a preferential VAT rate currently in place for software – software licenses are taxed at a zero rate – but three quarters of the software delivered comes from abroad, and in this situation we think that a targeted fee could be introduced. 

It should not be any higher than 10 percent. It could work according to a floating scale, start at 5 percent say, then 7 percent, then 9 percent, depending on the market’s needs. But the funds collected should be used as targeted support for the Russian companies that are able to produce the developments we need. The money should support those who have proved their worth, not just through words but by actual deeds, and already have some export potential.

Vladimir Putin: What’s your budget for the fibre-optic project?

Nikolai Nikiforov: We collect around 15 billion rubles [around $400 million] a year through the existing mechanism. We have singled out around 10 of the most vitally needed product types as far as software development goes, and their development could require up to 20,000 programmers.

Vladimir Putin: It sounds to me like a good idea and I will support it, of course. You need to work it all out with the Government though, talk with your colleagues in the Economic Development Ministry and Finance Ministry.

Nikolai Nikiforov: We will prepare the specific projects and the regulations and laws that they will require, work through them all together with our colleagues and submit them for approval.

Vladimir Putin: Good. Thank you.

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