BBM blackout

BLACKBERRY maker Research In Motion faced the prospect of a compensation bill from network providers on Thursday as it wrestled for a fourth day to get the world's dominant mobile email service working properly.

RIM said services were starting to improve in all affected regions, reducing disruption for the millions of users hit by delays and outages this week.

But significant damage may have been done to a business that had its share of troubles already, and a hefty bill to compensate customers could well land at RIM's door.

Spanish group Telefonica said on its website it would compensate customers, in line with Spanish law, and Britain's Vodafone is looking at the issue too.

"We are reviewing our options in terms of compensation," said a Vodafone spokesperson. He would not be drawn on whether such costs might be passed on to RIM, but analysts said there was little doubt the British group and other operators would try.

"In the past there have been outages but they have been limited to an hour here and an hour there and the operators have been tempted to let that go," said Will Draper, analyst at Espirito Santo.

"They have not been happy about it but it is not the kind of thing you go to court over. But this is completely different. This is a three-day outage. This is 10% of your working month, so I am pretty sure there will be compensation claims and I am pretty sure they will try and pass it on to RIM, but my feeling is it will be very difficult to make it stick."

The Spanish Consumer Association FACUA estimated clients would receive €0.23-1.90 for each 24 hours of service interruption. At such a rate, one full day's compensation to all 70 million BlackBerry users worldwide could cost the telecoms industry as much as €133m.

RIM is unique among handset makers in that it compresses and encrypts data before pushing it to BlackBerry devices via carrier networks. Apple and other rivals rely on the carrier networks to handle all routing and delivery of content.

But other providers are hitting it with smarter handsets and many with free offerings. Overnight, Apple started rolling out a new version of its iOS software, which includes BlackBerry Messenger (BBM)-like iMessage service.

"Clearly there are issues. And clearly this has come at a bad time - just as Apple are launching their rival service to BBM," said a person at the major European retailer which sells BlackBerry products.

Services recover

RIM said there had been a significant improvement for services and some users said services had started to work again, although there were still delays.

RIM co-CEO Mike Lazaridis said in a video posted on BlackBerry's Youtube channel it was too early to call the problem solved and he could not estimate time for full recovery.

"We are seeing steady improvements," Lazaridis said. "We expect to see continued progress, possibly some instability as the system comes back to normal service levels everywhere."

Singapore employees of global news and data provider Thomson Reuters were still having problems on Thursday but colleagues in London, Paris, Amsterdam, Beijing, Tokyo, Jakarta and Bangkok said BlackBerry service was normal.

The outages - and RIM's sluggish communications with its customers - have fanned rising dissatisfaction with Lazaridis and Jim Balsillie, RIM's other CEO.

Critics have called for a shakeup, saying the top managers have let the company fall too far behind Apple and other rivals in a rapidly changing market.

RIM shares have tumbled more than 50% this year on a series of profit warnings and product missteps - a sharp reversal of fortune for a company that once dominated its market.

Silver lining?

Anecdotal evidence suggested some users of the device are jumping ship.

"We have lost clients. Two clients changed their BlackBerrys for an iPhone yesterday here in our boutique," said a salesperson in an SFR boutique in central Paris. "They are not very satisfied."

But there are those with a BlackBerry in their pocket who sometimes half wish it wasn't there. "It's been a God-send," one user joked in an email to colleagues. "Let's hope the bloody things never work again."