Reuters | Sep 1, 2010 | 7:07pm IST
India on Wednesday launched a clampdown on major Internet communications firms, including Google and Skype, and began accessing some BlackBerry traffic in a campaign driven by security fears. Home Secretary G.K. Pillai said notices were being sent to Google and Skype asking them to set up servers in India and allow access to web data that officials fear could be misused by militants. Several other countries, most of them in the Middle East, have raised concerns that the BlackBerry might be used to aid terrorism or peddle pornography. But India could be the first to act against firms such as BlackBerry maker RIM, setting a precedent that could hurt companies with a reputation built on system security. Such moves could also impact the shape of India’s mobile phone market, the world’s fastest-growing, and possibly hand gains to Apple Inc and Nokia, BlackBerry’s two biggest smartphone rivals in India.
Pillai’s comments come after a weeks-long standoff between India and BlackBerry over a workable way for the government to monitor its data. India has said it wants the means to fully track and read BlackBerry communications. RIM won a reprieve this week after the government said the smartphone company had offered some solutions to access data which it was studying. India’s Home Minister Palaniappan Chidambaram said RIM had begun giving India access to its secure data from Wednesday. "Discussions for technical solutions for further access are continuing and the matter will be reviewed within 60 days," Chidambaram said in a statement. A Google spokeswoman based in India said: "We have not received any communication on this issue from the government. If and when we do, we will review and respond."
Shares in RIM on Tuesday fell to a 17-month low and closed at C$45.70 in Toronto. The shares have lost more than 18 percent of their value this month as growth in its marquee secure email services came under pressure from rivals and on security concerns. A complete shutdown of BlackBerry or Google may not be in India’s interest. India is keen to retain its position as one of the world’s leading information-technology nations and analysts said a BlackBerry ban would jeopardise its status and limit the efficiency of Indian businesses that rely on the smartphone.
A shutdown could also usher in difficulties for BlackBerry worldwide. "There could be various ramifications for this. If this happens, every other country may want a similar thing and then the whole issue of efficiency and management of the services and data will become difficult," said Romal Shetty, director at consultancy KPMG. A BlackBerry shutdown would affect about 1 million users in India out of a total 41 million BlackBerry users worldwide. Analysts see no easy fix to the standoff as RIM says it has no way of intercepting the data that countries want to access. RIM has denied media reports that say it provided unique wireless services or access to any one country.