BlackBerry maker Research In Motion may make concessions to India and Kuwait after their governments voiced concerns about the smartphone as a security threat, newspapers said on Tuesday.
The state challenges to the iconic email and messaging device highlight RIM's increasing dependence on international markets. Its once iron-clad franchise in North America has come under threat from iPhone-maker Apple Inc and other competitors.
The security issue has flared at a particularly inopportune time for Canada-based RIM. On Tuesday, it staged a New York event to unveil a new BlackBerry model considered crucial if RIM is to make headway in the consumer side of the market.
The new BlackBerry Torch features an overhauled browser, a touchscreen and a slide-out keyboard, putting RIM at a more level playing field with its competitors in terms of consumer appeal.
In addition to India, the United Arab Emirates and Saudi Arabia have raised security concerns. Together the three countries represent only about 5 percent of the 41 million BlackBerry devices in service worldwide. Even so, they are markets with strong growth potential for RIM.
Earlier, India's Economic Times newspaper reported that RIM had agreed to allow security authorities in the country to monitor BlackBerry services after pressure from governments worried about national security.
Separately, Kuwaiti daily al-Jarida, quoting a source it did not identify by name, said RIM had given initial approval to block 3,000 porn sites at the request of Kuwait's communications ministry. It said security was also a concern.
The two reports follow the announcement on Sunday that the United Arab Emirates would suspend BlackBerry Messenger, email and Web browser services from October 11 unless it could access encrypted messages.
RIM has declined to comment on the newspaper reports or on the reports of a UAE ban, but said on Monday in a statement it would respect both customers and governments.
RIM's chief technology officer David Yach told Reuters on Tuesday that governments may have trouble shutting down the BlackBerry service as most rely on the device for their own communications.
He said RIM could suggest to governments that they approach companies directly about lawfully intercepting corporate emails.
Unlike rivals Nokia and Apple, RIM controls its own networks which handle encrypted messages through centers in Canada and the UK.
That has made the BlackBerry popular as a secure way to communicate, but has worried governments.
RIM's Nasdaq-listed shares were down 0.8 percent at $56.52 on Tuesday. Its Toronto-listed shares fell 2.1 percent to C$57.88.
NEGOTIATIONS IN TRAIN
The Economic Times, citing internal government documents, said RIM has offered to share with Indian security agencies its technical codes for corporate email services, open up access to all consumer emails within 15 days and also develop tools in six to eight months to allow monitoring of chats.
An Indian government source could not confirm or deny the details in the newspaper but told Reuters the company and security agencies were discussing several options and a deal would be reached soon.
We hope to find a solution by this month end, the official said on condition of anonymity as he was not authorized to speak to media.
Kuwait's al-Jarida said Kuwait's government was working with RIM and telecom companies on legal controls that would guarantee national security on the one hand, and the rights of citizens ... to use the device's services on the other.
Saudi Arabia has also asked service providers to cut off Messenger, industry sources told Reuters.
Bahrain in April warned against using Messenger to distribute news.
FREEDOM OF INFORMATION
The United States weighed in on the matter on Monday and said the UAE was setting a dangerous precedent in limiting freedom of information.
But the UAE says it wants nothing more than what other nations have negotiated and notes it only announced plans for a ban after three years of attempts to work out a compromise.
Under U.S. law, for example, authorities can use a subpoena to gain access to telecommunications data and Britain has similar rules. RIM has refused to discuss the details of its pacts with individual governments.
Theodore Karasik, a security analyst at Dubai-based firm INEGMA, said there were real security concerns at stake.
There are several security issues here -- Iran, Yemen, al Qaeda -- that they could be worried about, he told Reuters.
Everyone wants to get their security access. The UAE is acting as a bellwether for other countries on this, he said.
Despite the ongoing wrangling, analysts expect the two sides to reach a compromise in the UAE.
I don't expect the UAE will be a day without BlackBerry access, said Jon Alterman, director of the Middle East program at the Washington-based Center for Strategic and International Studies.
What I see happening from the UAE perspective is saying we're not in the group of countries that you can't trust that's going to ride roughshod over its people with this data, we're in the group of countries who are battling tooth-and-nail to fight terrorism, Alterman told Reuters.
BlackBerry users in the UAE on Tuesday were offered iPhones and other handsets by service providers keen to hold on to some 500,000 customers in the Gulf Arab nation. Top provider Emirates Telecommunications Corp (Etisalat) offered free devices to customers affected by the ban.
Even if the government was able to track BlackBerry messages, users in the UAE were unlikely to stop using the devices, said Daegal Godinho, administrator of IT operations at Union Properties in Dubai.
Everything else that you do is already being monitored by the government in some way, or the other. So this would not be something new, said Godinho, who also looks after BlackBerry administration for his company.
Given that most of the big companies here are in any case local, or tied up with the government in some way, I don't think it would make any difference in this part of the world, he said.
(Additional reporting by Diana Elias in Kuwait; Erika Solomon and Amena Bakr in Dubai; Euan Rocha in Toronto; Sinead Carew in New York; Tabassum Zakaria in Washington. Writing by Jason Neely and Nicole Mordant)