* UAE to halt BlackBerry services in October

* Saudi Arabia regulator orders Messenger halt - sources

* UAE cites security risk from use of encrypted messages

* India has also warned about abuse of services

(Adds analyst comments, edits)

By Tamara Walid and Souhail Karam

DUBAI/RIYADH (Reuters) - More than a million
BlackBerry users may have key services in Saudi Arabia and the
UAE cut off after authorities stepped up demands on smartphone
maker Research In Motion for access to
encrypted messages sent over the device.

BlackBerry's Messenger application has spread rapidly in
the Gulf Arab region but because the data is encrypted and sent
to offshore servers, it cannot be tracked locally.

"Certain BlackBerry services allow users to act without any
legal accountability, causing judicial, social and national
security concerns," the United Arab Emirates'
Telecommunications Regulatory Authority (TRA) said in a
statement.

The UAE said it would suspend BlackBerry Messenger, email
and Web browser services from Oct. 11 until a fix was found,
while industry sources said Saudi Arabia had ordered local
telecom companies to freeze Messenger this month.

Sunday's moves cap wrangling with regulators over the
issue, which first surfaced in 2007.

India raised similar security concerns last week, and
Bahrain in April warned against using BlackBerry Messenger to
distribute local news. As far back as 2007, France cautioned
officials about using the services.

Indian security officials were concerned that BlackBerry's
encrypted data could be used to coordinate acts against the
state. They have clamped down on mobile phone operators in the
wake of 2008 attacks that killed 166 people in Mumbai.

The UAE, home to Gulf financial hub Dubai, said it would
halt BlackBerry services until an "acceptable solution" was
developed and applied.

Users of the device said that could mean disruptions for
companies and individuals who rely on the services, including
almost 700,000 in Saudi Arabia and some 500,000 in the UAE.

"It's a final decision but we are continuing discussions
with them," Mohammed Al Ghanem, director general of the UAE's
TRA, told Reuters.

"Censorship has got nothing to do with this," he said,
calling it instead a suspension due to RIM's lack of compliance
with UAE regulations.

Authorities noted there is no such problem with services on
smartphones from Nokia or Apple's iPhone.

"This is an issue for RIM since all email traffic goes
though its Network Operating Centres," said James Cordwell, an
analyst at Atlantic Equities. "Nokia and Apple do not route
traffic in this way."

RIM officials were not immediately available to comment.

The Canadian company has more than 41 million BlackBerry
subscribers, meaning the Gulf bans could affect fewer than 3
percent of its users.

"The UAE market in and of itself is not significant to RIM.
A bigger concern would be if it runs into similar issues in a
large market such as China, which has similar security
concerns, as Google is well aware of," Cordwell said.

USER UPROAR

In Saudi Arabia, BlackBerry handsets have become the
must-have gizmo for Saudi youth, enabling them to connect with
members of the opposite sex in a deeply conservative society.

"About 80 percent of Saudi-based BlackBerry users are
individual users and 20 percent are enterprises, while these
ratios are basically reversed in developing nations," said one
industry source.

"This problem would not have emerged if the bulk of
BlackBerry users were enterprises."

The governor of Saudi Arabia's telecom regulator declined
to comment. An Interior Ministry spokesman could not
immediately be reached to comment.

In the UAE, which is slowly emerging from an economic
slowdown brought about by the global financial crisis and
Dubai's property crash, some worried the move was aimed at
curbing free speech.

"If you want to eavesdrop on your people, then you ban
whatever they're using," said Bruce Schneier, chief security
technology officer at BT. "The basic problem is there's
encryption between the BlackBerries and the servers. We find
this issue all around about encryption."

Wrangling over the issue included an incident last year in
which a state-controlled local service provider, Emirates
Telecommunications (Etisalat), introduced what it
called a software upgrade. RIM said it was an unauthorized
"telecommunications surveillance application."

"I think there will be such an uproar, it probably won't
happen and a solution will be found," Irfan Ellam, Al Mal
Capital telecoms analyst said, referring to the mooted
BlackBerry services ban.

"BlackBerry is seen as essential by many companies, so if
you want to attract business to your country, it doesn't make
much sense to ban these BlackBerry services," said Ellam.

He said RIM had been asked to set up a proxy server in
India to allow the government there to monitor traffic from a
security perspective and the same approach might resolve the
issue in the UAE and elsewhere.

"The UAE is asking them to have a server here and they are
offering solutions other than that," a UAE source familiar with
the matter told Reuters.

"BlackBerry appears to be compliant in similar regulatory
environments of other countries, which makes noncompliance in
the UAE both disappointing and of great concern," UAE's
regulator said.

RIM shares rose last week on speculation that it might
unveil a new touchscreen BlackBerry this week to compete more
effectively with the iPhone and models.
(Additional reporting by Matt Smith, Mahmoud Habboush in
Dubai; Frederik Richter in Manama; Alastair Sharp in Cairo;
Reed Stevenson in Amsterdam; Frank McGurty in Toronto; Writing
by Amran Abocar; Editing by Jason Neely and Maureen Bavdek)