By Souhail Karam and Bappa Majumdar

RIYADH/NEW DELHI, Aug 4 (Reuters) - The makers of the
BlackBerry smartphone held last-ditch talks with Saudi Arabia on
Wednesday to avert a threatened cut-off of a key service, while
India took a tough line with the Canadian company.

Research In Motion is facing mounting demands from
governments around the world for access to its vaunted
encryption system on national security grounds.

The spat, which has highlighted the access some states seem
to have in comparison to others, threatens to cut off some 2
million BlackBerry users in the Gulf and India.

Security officials in India, a giant growth market for
mobile communications, warned the service would be halted if the
company failed to meet its concerns, a newspaper reported.

"We are very clear that any BlackBerry service that cannot
be fully intercepted by our agencies must be discontinued," The
Economic Times quoted an unnamed security official as saying.

"Offering access to data is part of the telecom licensing
guidelines and has to be adhered to."

An Indian government source told Reuters that RIM had
proposed to share some details of its BlackBerry services but
security agencies were demanding full access to a messaging
service it fears could be misused by militants.

RIM has said BlackBerry security is based on a system where
customers create their own key and the company neither has a
master key nor any "back door" to enable RIM or any third party
to gain access to crucial corporate data.

The company said on Wednesday it has never provided anything
unique to the government of one country and cannot accommodate
any request for a copy of a customer's encryption key.

The Saudi telecoms regulator met senior RIM officials ahead
of a Friday deadline to cut BlackBerry Messenger text messaging
service on Aug. 6 in the kingdom, the world's biggest oil
exporter.

"(The ban) is only for the Messenger. Negotiations are still
going on, the deadline is final," said Sultan al-Malik from the
Communications and Information Technology Commission (CITC).

CITC said on Tuesday it had informed the kingdom's three
mobile operators of the ban.

"The instructions for this ban are coming from high up, it's
not like any decision that has been issued by CITC before. They
will have to stop it, period," said another CITC official,
speaking on condition of anonymity.

RIM officials Frenny Bawa and Khaled Kefel are in the talks
which also include technical and regulatory experts from Saudi
Arabia's three mobile telecoms firms, a source at one of the
telecoms firms told Reuters.

"The talks are still ongoing," the source said. The cut-off
threat has hit shares of Saudi telecoms providers Etihad
Etisalat, Saudi Telecom Co and Zain Saudi Arabia, as well as
RIM's own stock price.

ACCESS DISPUTED

The United Arab Emirates, which plans a ban on BlackBerry
Messenger, email and web browser services from October, said RIM
is flouting its regulations. It maintains the planned suspension
follows three years of discussions with the company.

The UAE regulator plans no furthers talks with RIM and has
told the company to comply by October or be cut off.

The UAE says it does not have the same kind of surveillance
rights to BlackBerry messages as officials in the United States.

Security experts say that many governments enjoy the ability
to monitor BlackBerry conversations as they do communications
involving most types of mobile devices.

"The ability to tap communications is a part of surveillance
and intelligence and law enforcement all over the world," said
Mark Rasch, former head of the computer crimes unit at the U.S.
Department of Justice.

U.S. law enforcement agencies need a court order signed by a
judge to access BlackBerry call logs, email traffic or other
data from RIM. U.S. intelligence agencies do not discuss what
capabilities they have to spy on BlackBerry users.

RIM is in an unusual position of having to deal with
government requests to monitor its clients because it is the
only smartphone maker which manages the traffic of messages sent
using its equipment.

RIM Chief Technology Officer David Yach told Reuters on
Tuesday he believed governments were unlikely to follow through
on their threats because state officials themselves depended
heavily on the BlackBerry.

"I believe they'll have trouble pulling the trigger to shut
down BlackBerry. Most governments in the world rely on
BlackBerry."

The Dubai launch of the new BlackBerry Torch handset planned
for Wednesday at the exclusive Armani hotel in Burj Khalifa, the
world's tallest tower, was postponed.

"It will not be taking place. It was postponed due to the
current attention in the media," a hotel employee told Reuters.

Russian security concerns held up import of the BlackBerry
for years. The state security service FSB was concerned that
RIM's strong encryption software, and the presence of servers
outside Russia, contravened anti-terrorist laws and limited its
ability of monitoring traffic.

In November 2007, the FSB finally granted permission to
Vimpelcom and MTS to start shipping BlackBerrys on condition
that the servers be installed in Russia.

According to a source with one of the companies, Russian
operators still have to secure FSB permission before they can
introduce each new BlackBerry service.

The European Commission said it rejected the BlackBerry in
favour of Apple's iPhone and HTC smartphones during a 2008
review against certain criteria, including security and cost.
(Additional reporting by Maria Kiselyova in Moscow, Jim Finkle
in Boston, Tamara Walid in Dubai, Georgina Prodhan in Helsinki;
Writing by Amran Abocar; Editing by Jason Neely and Paul Taylor)