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Saudi Arabia Tests BlackBerry Monitoring as Messaging Ban Deadline Nears
A Saudi Arabian wireless operator said it’s waiting for instructions from the country’s regulator on whether to shut off Research In Motion Ltd.’s BlackBerry instant messaging service as a midnight deadline approaches.
“The issue is between CITC and RIM,” Abdullah Al Hariri, a spokesman for Etihad Etisalat Co., said in an e-mail today, referring to the Communications and Information Technology Commission. “If CITC says to us stop it we will do that.”
The Persian Gulf state’s three mobile-phone operators are testing a system that can monitor user data on BlackBerry devices to avert a scheduled midnight cutoff of the messaging service. Saudi Arabia has said it wants to monitor BlackBerry messages to prevent terrorism and illegal activities. Al Hariri’s comments may mean testing is over and a decision lies with the regulator.
The Saudi situation is being closely watched because it’s one of a growing number of countries in which Canada’s RIM faces scrutiny over its BlackBerry e-mail and messaging services. The United Arab Emirates, India and Indonesia have also expressed concern that such mobile communications could be used to violate laws or national mores.
“The sooner they reach agreements and publicize them, the better,” said Pierre Ferragu, an analyst at Sanford Bernstein in London. 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.”
Three Options
Talks between RIM and Saudi authorities show signs of positive solutions, Al Arabiya television reported today, citing unidentified sources at wireless operators. Negotiators are weighing three alternatives, the Dubai-based channel said.
The first option is that RIM agrees to give the kingdom special servers that make users’ data available to Saudi authorities. The second choice is that the Canadian company grants Saudi telecom regulators “keys” to log into RIM’s main encrypted servers so that they can monitor data of Saudi phone company subscribers. The third alternative is that the regulator resorts to third-party companies to decipher BlackBerry messaging data.
RIM rose 99 cents, or 1.9 percent, to $54.44 at 10:16 a.m. in Nasdaq Stock Market trading. Before today, the stock had dropped 21 percent this year.
The Wall Street Journal reported yesterday that RIM had reached a preliminary agreement with carriers and Saudi regulators to install local servers, citing an official with a Saudi telecom operator. A formal deal between the three parties is in the final stages of negotiations, the paper reported citing an official with a Saudi carrier, without specifying if it was the same one.
Still Working
Saudi Arabia had ordered its operators to turn the service off on Aug. 6 and then extended the deadline until midnight today. The service has mostly remained on, users said. Services in the kingdom are “still working,” Farouk Miah, an analyst at NCB Capital in Riyadh, said yesterday.
An unidentified RIM official was cited by Saudi Arabia’s Okaz newspaper yesterday as saying that the company and regulators had “agreed on everything.”
Tenille Kennedy, a RIM spokeswoman based at the company’s Waterloo, Ontario headquarters, today declined to comment on the press reports. Sultan al Malik, a spokesman for CITC didn’t respond to e-mails seeking comment.
Nadine Hani, a business presenter on Al Arabiya, reiterated yesterday that “the BlackBerry instant messaging service in the kingdom will not stop.”
No Special Access
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.
Saudi Arabia’s wireless operators include Etihad Etisalat, known as Mobily, Saudi Telecom Co. 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 U.S. and Canadian authorities began talks with foreign governments about potential BlackBerry bans.
“There is a legitimate security concern,” U.S. Secretary of State Hillary Clinton said Aug. 5, “but there’s also a legitimate right of free use and access.”
Turkey, U.A.E.
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 U.A.E. 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 said Aug. 4 that it couldn’t meet requests from governments that it reveal codes for reading some users’ communications. Its corporate service was designed to prevent RIM, or anyone else, from reading encrypted information.
“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 e-mail, which it can monitor,” said Tero Kuittinen, an analyst with MKM Partners in Greenwich, Connecticut. 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.”
RIM has about 1.2 million subscribers in Indonesia, 1.1 million in India, and a combined 1.2 million in the U.A.E. 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.
“What the market wants is less uncertainty,” said MKM’s Kuittinen.
To contact the reporters on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net
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