India issued an ultimatum on Thursday to Research In Motion Ltd. (RIMM, RIM.TO), maker of BlackBerry smart phones, to ensure that Blackberry corporate e-mail and messaging services are made accessible to its law enforcement agencies by August 31 or face a block of those services.
India's law enforcement agencies already have access to some BlackBerry services like voice, SMS, and BIS or BlackBerry Internet Service. However, India wants to gain access to the widely-used BlackBerry Enterprise Service and the BlackBerry Messenger Service.
The real-time corporate email and chat services have been under scrutiny because the encryptions make it impossible for intelligence agencies to monitor. India says this poses a potential national security threat.
"If a technical solution is not provided by 31st August, 2010, the government will review the position and take steps to block these two services from the network," India's home ministry said in a statement.
Under Indian law, service providers have to give law enforcement agencies access to communications on their networks, under certain conditions, including providing decryption keys.
Blackberry is said to offer the most secure mobile messaging and e-mail platform available, which is the primary attraction for most government and corporate customers. According to the company, its BlackBerry Enterprise service allows customers to create their own security keys, which RIM cannot access. The company also claims there are no other alternatives to crack the encryption. The company hosts most of its servers in Canada.
However, the stakes are high for Research in Motion since India is one of its fastest-growing markets. According to the Telecom Regulatory Authority of India, more than 600 million Indians use cellular phones, of which one million are BlackBerries. Hence, losing access to the Indian market would be of greater significance to RIM than losing the ability to provide service in other smaller markets.
India has deep security concerns. Suspected Pakistani militants involved in the November 2008 attacks in Mumbai are believed to have used Internet-based phone systems to communicate with their handlers in Pakistan while under siege by Indian security forces. In that incident, the government eventually tapped into satellite phone conversations between the terrorists and their handlers, but the attack was already under way.
RIM's BlackBerry service has also come under scrutiny from other countries, as unlike rivals like Apple Inc. (AAPL) or Nokia Corp. (NOK), the service operates its own network through secure servers located mostly in Canada.
The United Arab Emirates has threatened to discontinue the BlackBerry service from October 11, citing security reasons. Indonesia's regulator said last week that it wanted to have BlackBerry servers in the country as that would be safer than sending data to RIM's servers in Canada. Lebanon's regulator is also planning to hold talks with Research In Motion on providing access to data on the BlackBerry network to its security agencies.
RIMM closed Thursday's regular trading on the NYSE at $54.17, down $2.02 or 3.60% on a volume of 18.77 million shares.
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