RIM says rivals will face same pressure from India

TORONTO Tue Feb 22, 2011 2:07pm EST

A man tries to hold on to his umbrella as he walks past a Blackberry advertisement billboard in Mumbai August 30, 2010. REUTERS/Danish Siddiqui

A man tries to hold on to his umbrella as he walks past a Blackberry advertisement billboard in Mumbai August 30, 2010.

Credit: Reuters/Danish Siddiqui

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TORONTO (Reuters) - Research In Motion, looking to fend off rivals and assure wary Indian customers of its encrypted communications services, said its major competitors would face the same pressures over government security concerns.

The maker of the BlackBerry smartphone, which has been grappling with the Indian government for years, said it appreciated New Delhi's security concerns and was willing to discuss industry-wide policy changes.

But it also warned that draconian measures would limit India's economic development, including its massive business outsourcing industry.

"RIM fully appreciates and supports the priority India rightly places on national security," the Canadian company said in a statement on Tuesday addressed to enterprise customers -- businesses, professionals and government agencies -- in the world's fastest growing mobile phone market.

The Indian government is fearful that encrypted BlackBerry services could be used to foster unrest or allow militants to organize or carry out attacks.

But RIM noted that, in numerous meetings, the Indian government has also shown it recognizes encryption is fundamental to attracting and maintaining international business.

Some of RIM's competitors have sought to take advantage of the attention RIM was attracting in India, but they would not escape similar government scrutiny, the company said.

It said a partial list of companies that use encryption in India includes Apple, Cisco, Google, Hewlett-Packard, Microsoft, Nokia and privately held Good Technology.

Shares of RIM were down 2.1 percent at C$67.47 by midday on the Toronto Stock Exchange and off 2.2 percent at $68.33 on Nasdaq. The shares are up around 20 percent since the start of the year.

The Waterloo, Ontario-based company has increasingly focused on expanding its business in emerging economies as its hold on corporate customers in North America loosens in the face of stiff competition from more consumer-oriented smartphone makers such as Apple.

RIM has also faced similar political pressures in the Middle East and elsewhere, narrowly escaping bans in Saudi Arabia and the United Arab Emirates late last year. It blocked pornographic sites on its browsers in Indonesia in January following government pressure.

The firm gave India access to its consumer services in January but said it could not allow monitoring of its enterprise email.

Enterprise clients -- corporations and government agencies signed up to the BlackBerry Enterprise Server -- are assigned encryption keys stored only on individual user accounts.

For such users, any data sent from a BlackBerry is scrambled at the source and reconstituted on arrival at the receiving device.

In its statement on Tuesday, RIM said a January 31 deadline to reach an agreement with India was only for consumer services. It did not mention a timeframe for an agreement on enterprise services.

RIM has long maintained that only the sponsoring business or organization has the technical capability to grant access to encrypted enterprise email.

The Indian government has since turned to cellular service providers to gain access to the encrypted emails.

(Reporting by Alastair Sharp; editing by Rob Wilson)

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