Will RIM Cave To Pressure In Middle East Or Move On?

Reports surfaced Tuesday that Research In Motion may bend the rules to accommodate Middle Eastern countries including the United Arab Emirates, which said it plans to block some BlackBerry services.

At the heart of the issue is the UAE’s concern that BlackBerry data is transmitted through RIM servers outside the country and therefore can’t be monitored by government agencies to detect illegal activity or content. As a result, the UAE government said on Sunday that it will ban BlackBerry services like e-mail, messaging and Web browsing in the country starting in October -- even for foreign nationals visited the UAE.

The case is somewhat reminiscent of Israel’s recent ban on Apple’s iPad because the government was concerned the tablet computer’s Wi-Fi technology would conflict with Isarel’s existing wireless standards. The ban lasted approximately two weeks until the Israeli government gave the iPad the green light after determining the device would adhere to the country’s standards.

But pressure is mounting on RIM now that other countries have joined the UAE’s cause. According to Reuters, reports have surfaced in India and Kuwait indicating RIM may make certain concessions to both countries regarding the BlackBerry’s security architecture and encrypted data. Specifically, India’s Economic Times reported RIM has allowed the Indian government to monitor BlackBerry services such as e-mail and Web browsing.

Similarly, a Kuwaiti newspaper reported RIM would give the country approval to block approximately 3,000 porn sites from BlackBerrys. And the BBC has reported that Saudi Arabia will issue a similar ban on BlackBerrys, too.

RIM issued a statement yesterday assuring customers that ’it will not compromise the integrity and security of the BlackBerry Enterprise Solution.’ However, it seems that as the impasse has grown, RIM may be willing to do just that.

The situation with RIM in the UAE has apparently gotten progressively worse since last year when Etisalat, a UAE wireless service provider, issued a software update that the company said was designed to ease 2G to 3G handoffs. In reality, the software patch was a ’surveillance’ program that copied received e-mails and forwarded them to Etisalat. Since Etisalat is a partly owned by the UAE government, the obvious conclusion is that the ’surveillance’ spyware was an attempt by the government to crack BlackBerry’s security architecture and open encrypted e-mails.

RIM got wind of the spyware update and issued a rather diplomatic press announcement confirming that the update was ’not a patch and is not a RIM authorized upgrade.’ In very delicate language, RIM explained ’independent sources’ concluded the Etisalat update was a program that could enable unauthorized access to users confidential information and would send users’ received messages back to a central server at Etisalat.

Despite all of this, Etisalat maintained that the software updated was required for service enhancements and continued encouraging users in the UAE to download and install the patch. At the time, various reports indicated nearly 150,000 users among the 500,000 BlackBerry owners in the UAE had installed the Etisalat’s spyware. RIM washed its hands of Etisalat’s actions and after a while the controversy was swept under the rug and forgotten.

Until now, of course. Apparently, not enough people downloaded the Etisalat patch or the spyware program didn’t quite work as desired. And rather than try to mediate the dispute between its smartphone partner and its government, Etisalat has said it will give existing BlackBerry users free or discounted replacement smartphones -- either an iPhone of Android-based phone.

If RIM continues to object to the UAE’s mandate, it could force the company out of not just the UAE but other Middle Eastern countries as well. With RIM trying to keep the attention on positive developments such as its BlackBerry 6 platform and new BlackBerry Torch model, the company’s Middle East stalemate is a headache it doesn’t need.