Saudi Arabia extends deadline for BlackBerry shutoff

Appropriate action will be taken after proposed solution complies with requirements.
Saudi Arabia extends deadline for BlackBerry shutoff
DECISION DELAYED: Saudi Arabia has delayed its decision on shutting off RIMs BlackBerry instant messaging until midnight Aug 10. (Getty Images)
By Bloomberg
Sun 08 Aug 2010 11:06 PM

Saudi Arabia delayed its decision on shutting off Research In Motion’s BlackBerry instant messaging until midnight tomorrow, giving operators time to test a system that can monitor user data.

“Appropriate action on whether to suspend the service” will be taken after the proposed solution is shown to comply with regulatory requirements, the state run Saudi Press Agency cited a statement from the Saudi telecommunications regulator as saying.

Saudi Arabia has said it wants to monitor BlackBerry messages to prevent terrorism and illegal activities.

The Saudi situation is being closely watched because it’s one of a growing number of countries in which RIM, based in Waterloo, Ontario, faces scrutiny over its BlackBerry email and messaging services.

The UAE, India and Indonesia have also expressed concern that such mobile communications could be used to violate laws or national mores.

Pierre Ferragu, analyst, Sanford Bernstein, London, said: “The sooner they reach agreements and publicize them, the better."

He has an “underperform” rating on RIM. If the situation is not resolved “it could end up pushing users to go for an alternative brand in order to avoid problems if the service were actually shut off.”

The Associated Press reported yesterday that RIM reached a deal in Saudi Arabia that would allow authorities to monitor messages, citing an unidentified Saudi regulatory official. The accord involves installing a server inside Saudi Arabia to let authorities check the data of BlackBerry users, it said.

Saudi Arabia had earlier ordered its operators to turn the service off on Aug 6. The service, however, has mostly remained on, users said. Services in the kingdom are “still working,” Farouk Miah, an analyst at NCB Capital in Riyadh, said today.

An unidentified RIM official was cited by Saudi Arabia’s Okaz newspaper today as saying that the company and regulators had “agreed on everything.”

Nadine Hani, a business presenter on Al Arabiya television, reiterated today that “the BlackBerry instant messaging service in the kingdom will not stop.”

Sultan al Malik, a spokesman for the commission, and Etihad Etisalat Co, the service provider known as Mobily, didn’t respond to emails seeking comment on the reported agreement.

RIM said in a statement Aug 4 that it cooperated with governments around the world with standard practices and that any reports it gave special access or information to certain authorities were inaccurate.

Marisa Conway, a RIM spokeswoman in New York, declined to make any further comment when contacted by Bloomberg News.

Saudi Arabia’s wireless operators include Saudi Telecom Co, Mobily and a unit of Kuwait’s Mobile Telecommunications Co known as Zain KSA.

The carriers had been told to stop messaging services after a yearlong consultation with RIM failed to bring BlackBerry functions in line with Saudi Arabia’s telecommunications laws, the regulator said Aug 4.

The delay came after US and Canadian authorities began talks with foreign governments about potential BlackBerry bans.

On Aug 5, Hillary Clinton, US Secretary of State, said: “There is a legitimate security concern, but there’s also a legitimate right of free use and access.”

Turkey’s telecommunications regulator Aug 6 said there are “serious” security weaknesses related to BlackBerry services in the country, adding that it has set up a committee to look into the matter.

The UAE said in a statement Aug 4 that it wouldn’t be changing its decision to ban BlackBerry service in October and that it was open to discussions aimed at achieving a solution.

RIM rose $1.22 to $53.45 in Nasdaq Stock Market trading Aug 6, ending four days of declines. The stock has dropped almost 23 percent this year.

RIM said Aug 4 that it couldn’t meet requests from governments that it reveal codes for reading some users’ communications.

The corporate service was designed to prevent RIM, or anyone else, from reading encrypted information.

Tero Kuittinen, analyst, MKM Partners, Greenwich, Connecticut, said: “In some sense, the Saudi drama has been overblown as the government is already monitoring every other handset maker in the region offering SMS and email, which it can monitor."

He has a “buy” rating on the stock. “It’s only a question of whether RIM is going to go the level of other vendors, or if RIM is going to be particularly accommodating.”

The Indian government is still in talks with RIM over BlackBerry services in the country and is hopeful an agreement can be reached, Telecommunications Minister Andimuthu Raja said Aug 5.

India may ban RIM services unless the company agrees to resolve security concerns, a government official with knowledge of the matter said this past week.

RIM has about 1.2 million subscribers in Indonesia, 1.1 million in India, and a combined 1.2 million in the UAE and Saudi Arabia, said Mike Abramsky, an analyst at RBC Capital Markets in Toronto.

RIM had 46 million subscribers globally at the end of May.

Kuittinen said: “What the market wants is less uncertainty."

For all the latest Saudi Arabia news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.