India BlackBerry Ban Averted - For Now

Update 10:15 ET: India says it won't ban BlackBerry services for at least 60 days, easing up on the threat leveled over access to encrypted data.

The Ministry of Home Affairs says it will "review the situation in 60 days," after telecom authorities examine Research In Motion's proposals to give security agencies greater access to corporate e-mail and instant messaging.

RIM is facing widespread concern over its strong data encryption, which is beloved by corporate customers eager to guard secrets but troublesome for some governments in the Middle East and Asia, which worry it could be used by militants to avoid detection.

The decision came one day ahead of a government-imposed deadline for the device's maker Research In Motion Ltd. to give security agencies access to encrypted data.

A ban would have affected some one million BlackBerry users in India.

Earlier, Nokia - RIM's major competitor in India - agreed to install a server in the country to facilitate government monitoring. Nokia India managing director D. Shivakumar told reporters Monday that Nokia will install a server in India in November to ensure government access to data.

"We are launching the server on November 5 in compliance with all the rules and regulation in the country," he was quoted by the Press Trust of India as saying. "It is for hosting mail and ensuring that the government has access."

Nokia could not be reached for immediate comment.

RIM is facing widespread concern over its strong data encryption, which is beloved by corporate customers eager to guard secrets but troublesome for some governments in the Middle East and Asia, which worry it could be used by militants to avoid detection.

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The controversy, which reaches across Saudi Arabia, the United Arab Emirates, Indonesia, Lebanon and India, sent RIM's stock price to a 16-month low Friday.

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Striking the right balance between national security and corporate privacy is especially important to Indian outsourcing companies eager to protect client data.

"India is termed an outsourcing hub for the U.S. and Europe so data security is a primary issue. If there is any data leakage, we lose business," said Chetan Samant, 35, a manager at a software association as he thumbed his BlackBerry waiting for a flight from Mumbai to Nagpur recently.

He believes BlackBerry usage is so widespread in India now that it would be politically difficult for the government to enact a ban.

He, for one, would be sad to part with his BlackBerry.

"Once you get used to it, it's an addiction," he said.

Indian officials say that while they're not eager to ban the BlackBerry, they won't compromise on national security.

Security concerns flared after the terror attack on Mumbai in November 2008, which was coordinated using mobile phones, satellite phones and voice over internet phone calls.

Fear that the Commonwealth Games - a major sporting event to be held in New Delhi in October - could be a target for attacks have added to pressure on the Home Ministry, which is responsible for national security, to step up surveillance.

India also faces worsening violence in the disputed region of Kashmir and a rising Maoist insurgency in a mineral-rich swath of the East, which the government is eager to control.

RIM last week sought to broaden the debate over security, saying that singling it out for scrutiny was "ineffective and counterproductive."

"Anyone perpetrating the misuse of the technology would continue to have easy access to other wireless and wireline services that utilize strong encryption and are readily available in the market today," it said in a statement late Thursday.

But its proposal to lead an industrywide forum on security issues received a weak response from Indian telecom groups.

Indian officials have also raised concerns about Skype and Google, though both companies say they've yet to receive formal notice of an inquiry.

Some analysts say BlackBerry's super-encrypted corporate e-mails are unlikely to be used by militants, who prefer more anonymous technologies, like Gmail.

Others, however, caution that it would be easy for a militant group to set up a front corporation, which could then establish its own uncrackable BlackBerry corporate e-mail, considered by many to be the gold standard for data security.

Here's the list of the other countries which are considering Blackberry bans:

- Indonesia - The Southeast Asian country wants RIM to place a server in its country because it fears that e-mails could be intercepted as they pass through RIM's servers overseas. It is considering banning the service, but has no firm plans.

- Lebanon - The country says it is reviewing whether BlackBerry service raises any security concerns for it.

- Saudi Arabia - The kingdom's telecom regulator had ordered a halt to BlackBerry service across the kingdom. Saudi Arabia's telecommunications regulator says it will allow service to continue in the country for now, citing "positive developments." It's unclear, however, whether the reprieve is permanent.

- United Arab Emirates - The Persian Gulf state plans to shut down e-mail, messaging and Web browsing on BlackBerrys starting in October. It says it's still in talks with RIM.