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BlackBerry Said to Face Possible Restriction in India

Research In Motion Ltd.’s BlackBerry service may be banned in India unless the Canadian company agrees to resolve security concerns, according to a government official with direct knowledge of the matter.

India has told Research In Motion to set up a proxy server in the country to enable security agencies to monitor e-mail traffic, according to three government officials, who declined to be identified as the information is confidential.

Research In Motion faces increased competition from smartphones including Apple Inc.’s iPhone in India as the world’s second-biggest mobile-phone market prepares to roll out third-generation wireless services. The BlackBerry maker had some services blocked in neighboring Pakistan this year, and the United Arab Emirates is considering tightening security.

“RIM has the best encryption, significant subscribers, and a brand that’s known across the world,” said Anshul Gupta, principal research analyst at Gartner Inc. in Mumbai. “This isn’t the first time a government has had the fear that terrorists could use BlackBerry services for international communication.”

Resolving the concerns is crucial for Research In Motion to maintain its market leadership in India, Gupta said.

Address Concerns

The Waterloo, Ontario-based company has assured the Indian government that it will address the nation’s security concerns, U.K. Bansal, a special secretary in the home ministry, tasked with domestic security, said today.

“Whenever we have concerns we bring that concern out,” he said. “We expect those concerns to be addressed.”

Research In Motion spokesman Satchit Gayakwad declined to say if the company had been contacted by India’s telecommunications department.

“RIM does not disclose confidential regulatory discussions that take place with any government,” Gayakwad said from Mumbai. “However, RIM assures its customers that it is committed to continue delivering highly secure and innovative products that satisfy both the needs of consumers as well as governments.”

India’s three largest mobile phone operators, Bharti Airtel Ltd., Reliance Communications Ltd. and Vodafone Group Plc’s local unit all offer BlackBerry services and phones in India.

Resolution Next Month

The Ministry of Home Affairs and the Department of Telecommunications met about 10 days ago in New Delhi and the department told the mobile-phone maker to comply with the demands, one of the officials said. The authorities intend to resolve the issue by the middle of next month, according to the official.

Mint newspaper earlier reported the government is considering banning mobile e-mail services including BlackBerry.

Research In Motion’s tussle with the Indian government dates back to 2008, when negotiations with the Department of Telecommunications ended with the company agreeing to allow monitoring of e-mail on its handsets.

The company faced obstacles recently in Pakistan, where the national telecommunications regulator said it blocked Internet browsers on BlackBerry handsets, citing concerns over blasphemy.

BlackBerry devices, introduced in the U.A.E. in 2006, are not covered by the country’s 2007 Safety, Emergency and National Security rules, the Telecommunications Regulatory Authority said in an e-mailed statement July 26.

Data from BlackBerry communications is managed on servers outside the U.A.E., making it “beyond the jurisdiction of national legislation,” the regulator said. “Certain BlackBerry applications allow people to misuse the service, causing serious social, judicial and national security repercussions.”

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