U.S.: UAE BlackBerry block ‘dangerous’

Associated Press and Reuters
Posted Aug. 2, 2010 at 1:22 p.m.

The United States said it was disappointed that the United Arab Emirates planned to cut off key BlackBerry services and said the Gulf nation was setting a dangerous precedent in limiting freedom of information.

“We are committed to promoting the free flow of information,” said State Department spokesman P.J. Crowley. “We think it’s integral to an innovative economy.”

The UAE said over the weekend that it would suspend Research In Motion’s BlackBerry Messenger, email and Web browser services from Oct. 11 until the government could get access to encrypted messages.

Crowley said the United States was seeking additional information from the UAE about its security concerns, but urged the country to allow BlackBerry services to aid the free flow of information.

“It’s about what we think is an important element of democracy, human rights and freedom of information and the flow of information in the 21st century,” Crowley said, adding that the United States makes the same argument to Iran and China.

“We think it sets a dangerous precedent,” he said. “You should be opening up societies to these new technologies that have the opportunity to empower people rather than looking to see how you can restrict certain technologies.”

Meanwhile, Research In Motion on Monday promised it would not compromise security in its BlackBerry smartphone, but also said it will respect government requirements amid concern about a United Arab Emirates threat to cut off services to some customers.

The UAE revealed a plan over the weekend to suspend BlackBerry Messenger, email and Web browser services from Oct. 11 unless it gets access to encrypted messages on BlackBerrys.

The dispute sent RIM’s shares down 1.16 percent on Monday. Blackberry phones’ tight email security has been key to making the devices hugely popular with business people, and is a main selling point versus smartphones by rivals such as Apple Inc. and Nokia.

Waterloo, Ontario-based RIM said in a statement to customers that it respects both governments’ regulatory requirements, and security needs of corporations and other customers without explaining how it would do this.

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

A spokeswoman could not be reached for further comment.

The dispute is the latest of several surrounding BlackBerry security. Industry sources have also said Saudi Arabia had ordered local telecom companies to freeze Messenger this month and India raised similar security concerns last week. Bahrain in April warned against using BlackBerry Messenger to distribute news.

Rodman & Renshaw analyst Ashok Kumar said RIM did not shed any new light on how it would respond to the ultimatum.

“They can’t be dismissive of these governments but their raison d’etre is providing secure reliable communications for their customers. Once you compromise on that the story falls apart,” said Kumar.

“If they do compromise the network it will come to light sooner rather than later, so the company has to take the long view,” he added.

RIM said it made no direct comment on any discussions between the governments of the UAE or Saudi Arabia over the use of encryption in BlackBerry products. It said such talks were confidential.

Avian Securities analyst Matthew Thornton said investors worried the spat could spread to other countries, but said there may be little real cause for concern.

“It is a worry but I don’t think it’s insurmountable. I don’t think governments really want to cut off RIM,” he said. “They had the same problem with China but got past it. They’ve been in talks with India.

”From where I sit right now I’ve a hard time seeing a material economic impact to them,“ Thornton added.

Strategy Analytics analyst Neil Mawston said RIM’s practice of routing data via services in Canada has not stopped it from growing overseas so far, but he noted that a high-profile case could change this.

”However, if there is sustained public attention drawn to this practice over several months, and if international growth starts to slow as a result, then RIM may have to review its policy of routing data via Canada servers,“ Mawston said.

”Any country in the world could potentially raise concerns if they think it will affect their security. Countries that already have relatively tight PC Internet controls are likely to turn their focus increasingly to wireless data services as they become more popular.“

The Canadian company has more than 41 million BlackBerry subscribers, meaning the Gulf bans could affect fewer than 3 percent of its users.

Research In Motion’s U.S-traded shares dropped 0.3 percent to $57.37 on Nasdaq at mid-afternoon. In Toronto markets were closed due to a Canadian public holiday. RIM’s Canadian shares had closed higher on Friday.

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