http://www.reportonbusiness.com/servlet/story/RTGAM.20080527.wrim28/BNStory/Business/home
By Matt Hartley
Globe and Mail
May 27, 2008
As Research In Motion Ltd. charts its path toward global domination of
the smart phone market, the company continues to discover its biggest
strategic advantage is often a source of headaches when dealing with
foreign governments.
It was RIM's data encryption technology that helped the BlackBerry
become the preferred communication medium for the business world in
North America. But misperceptions about security infrastructure have put
the Waterloo, Ont.-based company on the defensive again this week.
Those same security measures that act as a selling feature have
officials in some governments worried that terrorists are using the
devices to communicate, while others don't like the idea of their
nation's data being routed abroad through RIM's Canadian Network
Operating Centres (NOCs).
After Indian officials raised those concerns recently and threatened to
shut down BlackBerry service in that country, RIM moved to quiet the
storm by firing off a letter to customers that attempted to clarify the
company's policy.
The controversy has left RIM officials trying to allay security concerns
of foreign governments on one hand, while making it clear to
shareholders and customers in other countries that it is not bending to
local pressures and altering its basic infrastructure.
“RIM respects the needs of governments to balance regulatory
requirements alongside the corporate security and individual privacy
needs of its citizens and RIM will not disclose confidential discussions
that take place with any government,” the company said in the letter.
RIM said it recognized customers might be “curious about the discussions
that occurred between RIM and the Indian government regarding the
encryption in BlackBerry products,” and that it wished to “assure
customers” about the company's security policies.
With more than one-third of its revenue now coming from markets outside
of North America, RIM faces a mine field of security controversies that
is becoming increasingly treacherous.
The company is known for being tight-lipped about its security practices
and for withholding details about how its network operates, something
the company has admitted sometimes leads to speculation and
misinformation.
In March, India's Ministry of Telecommunications reportedly demanded
that RIM install servers in India and provide the government with a
“master key” to help security agencies intercept and decrypt BlackBerry
messages in an effort to crack down on terrorism.
Similar complaints surfaced last June, when security forces in France
advised Paris officials not to use their BlackBerrys to send sensitive
information, fearing the data could be intercepted in foreign
territories.
“The problem seems to be that these countries don't like the fact that
the e-mail goes through the RIM NOC,” said Jack Gold, president of J.
Gold Associates, a wireless consulting firm in Boston. “The NOC is not
in India, so their e-mails are actually leaving the country and then
coming back. France had that problem as well.”
RIM declined to comment on the nature of its discussions with the Indian
government, but in a recent statement prepared for customers, the
company outlined how it would be impossible to provide any government
with such a master key or “back door.”
Messages sent from BlackBerry devices are difficult to monitor because
the data is encrypted before it is transmitted. Large companies can add
an extra level of encryption to messages by purchasing a BlackBerry
Enterprise Server (BES), which sits in their IT department and
communicates directly with RIM's NOCs. The BES adds a second layer of
encryption that can be decoded only by using an encryption key that only
the company possesses. Not even RIM has access to that information.
“The reality is that RIM's BES service is unbreakable,” said Canaccord
Adams analyst Peter Misek. “The [U.S. National Security Agency] can't
break it; no one can break it. “RIM won't give out back doors because
then all these governments will want to have this special ability.”
U.S. government officials initially expressed concerns about the
security of the BlackBerry network once the device became a staple in
Washington power circles. However, the U.S. government is now one of the
biggest BlackBerry customers in the world; the Federal Bureau of
Investigation purchased almost 20,000 devices for field agents in April.
BlackBerrys bought directly from a telecommunication provider by small
companies or by individuals operate on the BlackBerry Internet Service
(BIS). Messages sent from these devices are routed through the telecom
company's server which links directly to the NOC.
“The BIS encryption isn't as strong, and if enough horsepower is thrown
at it, it could potentially be cracked,” Mr. Misek said.
Analysts say in some jurisdictions – such as China and Russia – where
governments wish to monitor BlackBerry transmissions, RIM has likely
opted to limit the distribution of BES networks in favour of the BIS
variety in order to gain access to those countries' mobile markets. RIM
said it does not discuss the details of discussions it holds with
governments and carriers around the world.
“I'm sure the RIM folks did have to do some funny stuff which they
didn't want to make public to allay the fears of the Chinese
marketplace,” Mr. Gold said. “It's the same issue [the Chinese] have
with Yahoo and Google's search engines … China is very fussy about what
they allow on their networks.”
RIM's security features are the biggest reason why most analysts predict
that Cupertino- Calif.-based Apple Inc.'s iPhone will struggle to become
a serious competitor to the BlackBerry for business customers.
“RIM security is head and shoulders above the iPhone,” Mr. Gold said.
“There really isn't any security on the iPhone right now.”
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Received on May 28 2008
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