The proposed “Virtual Space Regulation” law would expand security control over online activity, enforce identity verification, and preserve a lucrative censorship-driven market as millions of Iranians depend on internet access for their livelihoods.
The renewed initiative comes as internet access has yet to return fully to normal following months of restrictions. Rather than restoring unrestricted access, the regime is moving to institutionalize a more centralized system of surveillance and control, adding new layers of bureaucracy to an already heavily restricted digital environment.
The bill revives the central objectives of an earlier internet-control initiative that encountered public opposition during the previous parliamentary term. Although the new version is reportedly shorter and contains fewer provisions, its key mechanisms would significantly strengthen the authorities’ ability to regulate online activity.
A Centralized Command Structure for Cyberspace
Under the proposed legislation, the Supreme Council of Cyberspace would assume the position of the highest authority governing the internet. The National Cyberspace Center would be transformed into a central command structure for cybersecurity operations, with government bodies required to implement its directives.
The proposal would also prevent the creation of new structures dealing with cyberspace without the Supreme Council’s approval. This provision would restrict the ability of government officials to establish parallel bodies or pursue alternative approaches to internet policy outside the council’s authority.
Another provision would make identity verification mandatory across online services, tying access more closely to users’ official identification details. Such a requirement would expand the authorities’ ability to connect online activity to identifiable individuals, raising serious concerns about privacy, anonymity, and the monitoring of digital communications.
Taken together, these measures would move internet governance further away from ordinary public administration and toward a centralized security apparatus. The proposed framework would give the authorities greater institutional power to supervise online activity while limiting the scope for alternative regulatory arrangements.
Internet Censorship and the Battle for Billions
The renewed legislative push is also unfolding against the backdrop of a lucrative market created by the regime’s own filtering policies.
Estimates cited in Iranian state media and attributed to domestic surveys suggest that more than half of the population—and potentially over 60 percent—use virtual private networks (VPNs) to circumvent restrictions. Average monthly spending on these services has been estimated at approximately 400,000 tomans per user, while the total monthly turnover of the VPN market has been put at around 800 billion tomans.
These figures point to a substantial financial burden on people who must pay extra simply to access websites and services that are freely available in much of the world. They also raise questions about the beneficiaries of a system in which censorship creates demand for circumvention tools.
State media have themselves discussed what they describe as a VPN mafia. The persistence of widespread filtering, despite its economic and social costs, makes the financial interests surrounding restricted internet access an important part of the debate.
Removing restrictions would undermine this censorship-driven market. Maintaining them, by contrast, would preserve the conditions under which millions of users feel compelled to pay for alternative access.
The dispute over the proposed legislation therefore involves more than competing administrative models. It also concerns control over a system that imposes costs on ordinary users while generating substantial revenues in the shadow economy surrounding internet restrictions.
Factional Infighting Over How to Preserve the Regime
The controversy reveals a broader struggle within Iran’s ruling establishment over how to maintain control in the face of growing public discontent.
One camp insists that authority over the internet must remain firmly in the hands of the Supreme Council of Cyberspace, an institution whose decisions are closely aligned with the supreme leader’s power structure and the security establishment. Supporters of this approach favor tighter restrictions and centralized command.
Another camp, associated with President Masoud Pezeshkian and the communications ministry, has warned that shutting down the internet could prove counterproductive. One concern is that increasingly severe restrictions will push more people toward satellite-based services such as Starlink, which are more difficult for the authorities to control through conventional filtering systems.
The competing positions reflect different assessments of the same political problem. One side regards tighter control as essential to preventing the organization and spread of dissent. The other fears that excessive restrictions could accelerate the adoption of technologies beyond the regime’s reach.
Neither approach represents a commitment to unrestricted internet access. The central disagreement is over which method offers the authorities greater control and the best chance of preserving the existing power structure.
This internal conflict also exposes the limits of the regime’s ability to reconcile its demand for political control with a society and economy increasingly dependent on digital connectivity.
Millions of Livelihoods at Risk
The consequences of the proposed legislation would extend well beyond political communication and online privacy.
Figures cited in Iranian media suggest that the incomes of approximately 50 to 60 percent of households are connected, directly or indirectly, to internet access. During recent disruptions, many people dependent on online commerce and digital services have experienced falling revenues, with some reportedly suffering severe losses.
For small businesses, online sellers, freelancers, service providers, and other workers, internet access is an economic necessity rather than a luxury. Prolonged disruptions can cut off customers, interrupt payments, undermine business operations, and eliminate income opportunities.
Mandatory identity verification and additional regulatory oversight would introduce further compliance requirements for online activities. A new supervisory body overseeing existing regulators could also expand the administrative and security burden on businesses and individuals operating in the digital economy.
At a time when Iranian households are already struggling with inflation and declining purchasing power, policies that make internet access more restrictive and costly threaten to deepen economic insecurity.
The damage is not limited to periods of complete shutdown. Persistent filtering, unstable connections, and the need to purchase circumvention tools can impose continuing costs on households and businesses even when some services remain accessible.
Removing VPN Criminalization Does Not Mean Ending Censorship
One feature of the revised proposal could create the misleading impression that the regime is easing its approach. A provision in the earlier version that criminalized the use of VPNs has reportedly been removed from the new draft.
However, removing that provision does not amount to abandoning internet censorship. The restrictions that make VPNs necessary would remain in place, leaving users dependent on circumvention tools to reach blocked services.
The distinction is significant: the regime could refrain from explicitly criminalizing the use of VPNs while preserving the filtering system that sustains demand for them. Without a fundamental change in internet policy, the economic burden on users and the authorities’ capacity to restrict access would remain.
The revised plan would thus retain the central architecture of control while potentially modifying some of its legal provisions.
Internet Freedom and the Regime’s Fear of Dissent
The renewed push to regulate cyberspace highlights a fundamental contradiction in the regime’s approach to technology. Iran’s economy and society increasingly rely on digital communications, yet the authorities continue to view the open exchange of information as a threat to their political survival.
The internet enables people to communicate beyond official channels, document abuses, share information, and coordinate collective action. For a government concerned about the spread of dissent, these capabilities represent a challenge that cannot be addressed through technical restrictions alone.
The struggle over the proposed law reflects the ruling establishment’s dilemma: tighter restrictions may strengthen its immediate capacity for surveillance, but they also impose mounting economic costs and risk driving users toward technologies that are harder to control.
Meanwhile, factional disputes over which institution should command cyberspace reveal that the regime has yet to resolve the tension between centralized political control and the practical consequences of cutting millions of people off from the open internet.
The proposed “Virtual Space Regulation” plan is therefore not simply a technical reform. It is part of a broader effort to consolidate the regime’s control over communications at a time when digital access has become essential to both public life and economic survival. For ordinary Iranians, its likely consequences include greater surveillance, continued censorship, additional financial burdens, and further uncertainty for livelihoods dependent on internet access.