For Some Countries, Skype Too Open, BlackBerry Too Closed

maoResearch in Motion isn't the only company facing government interference in the United Arab Emirates and other countries over its phone service. In its filing with the SEC to raise up to $100 million through an IPO last week, Internet phone provider Skype pointed out that "certain countries have made the use of one or more of our products illegal or are reported to have prohibited or blocked access to our website."

Among these is the UAE and Egypt. Access to Skype's site and products has reportedly been blocked since 2006 for undisclosed reasons. Numerous VoIP sites have been blocked in connection with a national ban on such applications, according to an August 2009 report by the OpenNet Initiative (ONI), a partnership that tracks the Internet filtering and surveillance practices of countries worldwide.



Skype's IPO filing also states that in March the Egyptian National Telecommunication Regulatory Authority (NTRA) announced it was banning Skype on mobile devices under a law that international calls must pass through a long-distance calling gateway controlled by an Egyptian company.

Skype said it believes its services can still be accessed through fixed broadband and Wi-Fi connections in Egypt.

But unlike RIM's BlackBerry platform, which the UAE, Saudi Arabia and India have recently threatened to ban because it's too closed, issues with Skype likely stem from the very openness of its peer-to-peer technology. Its system relies on the existing Internet connections of its 124 million "connected" users rather than its own network infrastructure.

As a result, "we are unable to determine the exact location of a caller who uses our products to make a call over the Internet," Skype stated in the risk factors section of its filing. "Our customers have the ability to use our products nomadically, meaning that they can log in and use our products from virtually any Internet connection worldwide."

For governments focused on maintaining tight control over broadband access and communications, it's not hard to see how Skype's software would pose a problem. China dealt with that issue by forming a joint venture with Skype called Tom Online that provides it greater oversight of the service in that country.

Through the local version of Skype, the Chinese government kept over a million user records including IP addresses, usernames, and time and date stamps in all the log files that could be decrypted, according to a 2008 ONI report.

For its part, RIM has resisted pressure from governments in the UAE, Saudi Arabia and India to provide more assistance in monitoring email and text messages on BlackBerry phones for security reasons. Unlike other smartphone makers, RIM maintains its own network servers, mainly in Canada, outside the jurisdiction of foreign governments. RIM has also said it can't decrypt its own business users' emails.

However, RIM has reportedly offered information and tools to help India track BlackBerry email and messaging services, according to a Wall Street Journal report on Friday. In a statement released last Thursday, RIM said it would only help carriers meet national security rules, won't provide more access than its competitors and won't change the security architecture of its corporate email servers.

It also said its global standard for legal access requirements, "does not include special deals for specific countries." But if RIM wants to continue doing business in countries with different technology infrastructures and laws governing electronic surveillance, it's hard see how the company won't end up cutting separate deals with each.

As Skype acknowledges in its IPO filing, "the scope of applicability and level of sophistication of such regulations vary greatly from country to country." But with its focus on corporate users, deeper pockets and a bigger brand, RIM is in a better position to negotiate with foreign governments over the form and extent of its compliance than a young, albeit fast-growing, company like Skype.

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