NEW DELHI—India said Monday that it will put off blocking BlackBerry services in the country for two months after Research In Motion Ltd. agreed to allow more government access to its encrypted email and messaging services
The Canadian company has agreed to provide "some technical solutions" for local security agencies to monitor the company's encrypted email service, a senior Indian government official said, without outlining what the solutions were.
The government, which had threatened to ban BlackBerry if RIM failed to come up with tools to monitor the services by Tuesday, said it will start using the solutions immediately, and decide in 60 days whether it has gotten all the access it needs.
The government will also soon demand extra access from other international online names such as Google Inc. and Skype Ltd., the government official said.
The Indian government will give the two companies time to provide the government better access to Google's Gmail accounts and the inner workings of Skype's Internet telephony services, most likely by requiring that some of their servers be on Indian soil, he said. "They will be given some time to comply. We will be pushing for servers in India," he said.
The government also expects RIM to have a server in India so that Indian authorities have easier access to the information that passes through them. Officials at RIM, Google and Skype couldn't be immediately reached for comment.
Finnish mobile handset maker Nokia Corp. said earlier in the day Monday that it plans to set up servers in India by November for its enterprise email services to address the government's concerns.
The Department of Telecommunications will study whether having servers located only in India will give authorities the kind of access they require, the federal Ministry of Home Affairs, said in a written statement. The department is expected to submit its report on using a local
server in 60 days, it added.
Until then, RIM has offered "some technical solutions which people suggested—from virtual servers to making these accessible in various ways," the official said, without elaborating.
India and countries such as Saudi Arabia and the United Arab Emirates recently sought access to monitor the services as they fear heavy encryption makes the BlackBerry convenient for terrorists to use without being monitored.
While Saudi Arabia has already said it would allow BlackBerry messenger services to continue as some of its regulatory requirements have been satisfied, the UAE said it would halt the BlackBerry's messenger, email and Web- browsing services starting Oct. 11.
Talks between RIM and various countries have centered mostly on data routed through the company's system for corporate emails, BlackBerry Enterprise Server, and its instant-messaging service, BlackBerry Messenger, whose high levels of encryption can prevent government monitors from deciphering content or determining sender or recipient. RIM has said that even it can't decrypt BlackBerry corporate emails.
If India requires RIM to build a BlackBerry data center within the country, it would cost the company tens of millions of dollars, analysts said. But having the center on Indian soil would make it easier for Indian authorities to demand data from RIM.
The company, based in Waterloo, Ontario, has become one of the biggest global brands in telecommunications because of its ability to deliver encrypted emails to people's pockets. Its growing global popularity, however, has caught the attention of many governments that are
worried that its technology could be used to cover the tracks of criminals or terrorists.
RIM needs to make India happy or it risks being left out of one of the world's most important markets. With more than 635 million cellular subscribers, India is already the world's second-largest cellular market after China. Emerging economies are increasingly important to RIM and other cellular-service companies as they try to ride the growth in the budding markets even as growth slows in the West.
While the Canadian company only has about one million of its 41 million BlackBerry customers in India, most of them are corporate users, making the country a key market, analysts said.
Cellular companies that provide BlackBerry service to their customers also want to make sure the service stays, analysts said. BlackBerry users are among the biggest spenders on their phones in India, where the average user spends less than $10 a month on cellphone bills.
"If the government shuts down RIM, the loss to operators' revenue will be significant," said Rajan S. Mathews, director-general of the Cellular Operators Association of India. "Right now, these operators get 10% to 15% of their revenue from BlackBerry services and it's a high-margin business."
According to Informa Telecoms & Media forecasts, India's smartphone market will reach about 12 million by the end of this year, and is set to grow to 40 million by the end of 2015. There may be as many as 600,000 Blackberry handsets sold in India this year alone, said Nick Jotischky, principal analyst for emerging markets at Informa.
"The fact that there will be a significant increase in the size of India's addressable market that can afford smartphones means it is even more important for RIM to focus on India," Mr. Jotischky said.
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