India gives BlackBerry group more time

Research in Motion and India’s government avoided a standoff on Monday by agreeing to extend for two months talks over a demand to open all BlackBerry services to scrutiny by the country’s intelligence agencies.

The reprieve came before a Tuesday deadline for mobile operators in India to shut down the Canadian company’s corporate e-mail and messaging services if it did not agree to the demand. This would have caused serious disruption before next month’s Commonwealth Games.

The home affairs ministry said: “RIM have made certain proposals for lawful access by law enforcement agencies.” The ministry added that it would “review the situation within 60 days”.

This followed talks over the weekend between Jim Balsillie, RIM’s co-chief executive, and senior home affairs officials. The dispute was emerging as a test of the private sector’s right to data security.

RIM said India’s demands for access to its encrypted corporate e-mail service, known as BlackBerry Enterprise Server, was technically unfeasible since customers held the keys to the codes.

The company was concerned about losing access to the Indian market, where it has 1m subscribers. RIM was also worried about setting a precedent for government interference in its services that would undermine the confidence of its 46m users worldwide.

The company’s share price has declined 32 per cent in US trading this year, underperforming rival handset makers. This has already led competitors, notably Nokia, to take their own measures to ease Indian government concerns. Nokia said it would install a server in India to handle communications from its messaging service by November.

India, shaken by terrorist attacks in Mumbai and militant activity across the border in Pakistan, insists that its security agencies should have access to all communications in the country.

“Any communication through the telecom networks should be accessible to the law enforcement agencies and all telecom service providers including third parties have to comply with this,” the home affairs ministry said on Monday.

RIM had made “certain proposals” for lawful access to BlackBerry communications that would be “operationalised immediately”, the ministry said, without giving details.

The department of telecommunications will prepare a report on a long-term solution under which RIM would locate a server in India. The department would report to the ministry within 60 days.

However, analysts doubted whether the Canadian company would technically be able to meet the government’s demands. The BlackBerry Enterprise Server system channels packets of encrypted information through RIM’s routers to servers controlled by corporate customers. These are beyond RIM’s control.

Nokia’s offer to install a “push server” in India might not meet the government’s requirements for the same reason.

Kunal Bajaj, from Analysys Mason, a consultancy, said: “If they want to deliver secure e-mail then they’re going to run into the same exact problem.”