Pact Keeps BlackBerrys Running

Preliminary Accord Between Saudi Arabia, Research in Motion Lifts Hope of Ending U.A.E. Impasse.

RIYADH—Saudi Arabia's telecom watchdog and local phone operators reached a preliminary agreement with BlackBerry maker Research in Motion Ltd. over the weekend to use local data servers, said an official at a Saudi-based telecom operator involved in the talks.

The move comes as governments agitate for more access to secure data handled by the devices. And it raised hopes that a similar accord could soon be reached between the smartphone maker and the United Arab Emirates, which said it plans to suspend BlackBerry services, citing national security.

Saudi Arabia's telecom regulator delayed the start of a ban on Blackberry's instant-messaging service, giving the kingdom's mobile operators until the end of Monday to test proposed solutions.

The Communication and Information Technology Commission said last week that it would ban services starting Aug. 6, until the kingdom's three mobile-phone operators fulfill some regulatory requirements.

CITC didn't say what those requirements were.

The ban deadline was extended "due to the efforts exerted by the mobile phone service providers in order to meet the regulatory demands of the commission," and to test proposed solutions by the operators, CITC said in a statement.

An official at a Saudi-based telecom operator involved in the talks there said the agreement involved installing a local server in the kingdom, and that "a formal deal between the parties is in the final stages of negotiations."

CITC officials couldn't be reached immediately for comment. RIM didn't respond to requests for comment.

State-controlled Saudi Telecom Co. stopped BlackBerry services for about four hours Friday but restored them, phone users said. Customers of the two other big Saudi carriers said they hadn't been affected at all.

The kingdom has about 700,000 BlackBerry users.

"A compromise shows resilience and understanding by RIM that Saudi Arabia and the region as a whole is a fast-growing market and that regional governments are seeking for equal treatment provided by RIM to other, Western governments for national security purposes," said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole in Riyadh.

Waterloo, Ontario-based RIM has come under pressure from authorities in Saudi Arabia, the U.A.E. and several other countries in the region to provide greater access to the encrypted information sent by its devices.

The governments are targeting RIM because its BlackBerry services allow unusually high levels of encryption, and because—unlike other smartphone makers—RIM routes the data through its own server networks, the biggest of which is in Canada.

The U.A.E.'s Telecommunications Regulatory Authority said it would suspend BlackBerry services—including instant messaging, email, and Web browsing—starting Oct. 11 due to national-security concerns.

The regulator then said late last week that while the decision on the ban was final, it was "open to discussions in order that an acceptable, regulatory-compliant solution might be developed and applied."

A possible agreement in Saudi Arabia "alone is significant and points to room for maneuver" for a solution in the U.A.E., said Matthew Reed, a senior analyst at Informa Telecoms and Media in Dubai. A negotiated settlement "looks more likely than it did last week, when both parties seemed to be taking quite a hard line," he said.
—Phred Dvorak, Nour Malas and Keith Johnson contributed to this article.

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