In a letter to service providers, the Indian Government this week asked that telecoms offering BlackBerry service implement RIM’s interception solution by December 31st.
In that letter, the government said “Blackberry interception solution is in the final stages of development and testing by RIM and the telecom service providers in conjunction with an Legal Intercepting (LI) vendor. The developed solution should be deployed in coordination with RIM and offered for testing to the respective TERM cells on or before 31-12-12.”
Earlier this year, after some resistance, RIM agreed to provide Indian security agencies with a solution for lawful interception of encrypted data and monitoring, including the technology to read decrypted emails.
India is an important emerging market for RIM. A recent study by Indian-based Cyber Media says mobile phone sales in India crossed the 100 million mark in the first six months of 2012. The report said BlackBerry had a 12.1% share of this market.
Northern Securities analyst Sameet Kanade says that while RIM, to date, has denied its data could be intercepted or decrypted, this week’s announcement by the Indian government casts serious doubt on that assertion. He believes this may create headwinds for the company, as one of the key value propositions for enterprise and government users might no longer be valid. Kanade points to a recent shift within the US government, where several agencies have switched to Android or iOS platforms. In a research update to clients this morning, Kanade reiterated his SELL rating and $4.50 target on Research in Motion.
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RIM’s secure network has been a constant source of debate in the tech community, and to those with an eye towards privacy legislation. After being pressed on security issues in India, Saudi Arabia and the United Arab Emirates last year by BBC reporter Rory Cellan-Jones, then co-CEO Mike Lazaridis walked out of the interview, but not before declaring: “We don’t have a security problem…this is a national security issue.”
Then, a year ago, RIM’s Blackberry blog was hacked by protestors unhappy with the company’s cooperation with Scotland Yard who were concerned that crimes had been organized by rioters using BlackBerry Messenger.
RIM”s approach to security is fundamentally different than other device makers. The company uses complex codes to encrypt data as it travels between a BlackBerry server and the BlackBerry device. All BlackBerry traffic runs through the company’s own secure Network Operations Centers.
Tech writer Carmi Levy, writing about these issues for IT Business last year said “RIM’s best-of-breed mobile security model is so good that it gets singled out while other vendors – I’m looking at you, Apple – get a free ride (okay, who are we kidding? Traffic on iPhones and other smartphone platforms is so relatively easy to pick off that it’s safe to assume that governments are already monitoring them.)”
Security expert Dan Croft of Mission Critical Wireless told Ars Technica last week that “It’s premature to run the obituaries on RIM. Clearly they are facing some significant issues, but there are still millions and millions of BlackBerrys out there that are operating just fine. That being said, what we’re typically seeing is not RIM getting ripped out of an enterprise environment. We’re just seeing the addition of non-BlackBerry devices.”
While Croft says recent outages of RIM’s network are troubling, the company still has a significant moat in the enterprise world.
“If it were up to IT managers there would still be only one solution out there and it would be called BlackBerry,” he said.
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