Nokia Siemens Can’t Meet Indian Demands, Finland Says

Nokia Siemens Networks, the network-equipment joint venture of Nokia Oyj and Siemens AG, finds India’s demand to get access to hardware and software design documents “impossible to meet,” Finland’s Communication Minister Suvi Linden said.

“We can understand that India wants to be careful with network security, but it’s important that restrictions are not too tough so that companies can’t be here,” Linden said today in New Delhi.

India amended phone-license rules this year, requiring equipment vendors to allow authorities to inspect telecommunication source code in design documents for security threats. Escrow accounts were proposed as a mechanism for this. The country this year blocked Chinese companies Huawei Technologies Co. and ZTE Corp. from selling equipment to domestic phone carriers, citing espionage concerns.

“The escrowing of our source code is unacceptable to us as an option for meeting security concerns in India,” Nokia Siemens spokesman Ben Roome said by e-mail. “We have suggested alternate means and are hopeful that the Indian government will consider those suggestions.”

Home Secretary Gopal Krishna Pillai said in September that the Indian government was in talks with European producers. Nokia Siemens and Ericsson AB said at the time that they welcome having a dialogue with the government.

According to the new license rules, released in July, mobile phone companies would face a penalty equivalent to the value of their equipment contracts if inspectors find security breaches.

‘Profound Issue”

“Nokia Siemens says this demand is impossible,” Finland’s Linden said today. “It is such a profound issue, we’re not sure how it is going to work. Some of the rules are not acceptable.”

Nokia Siemens, based in Espoo, Finland, and Ericsson, the world’s two largest wireless-network equipment makers, are the top vendors in India’s $9.2 billion phone-network market, with shares of about 23 percent each, according to the latest annual survey by trade publication Voice & Data. Huawei has a 17.6 percent market share and ZTE has 13.7 percent, according to the survey.

Nokia Siemens is “hopeful that any policy formation would happen as a result of open dialogue and consultative approach with the industry players” and be in line with international best practices, it said in an e-mailed statement today.

“The government wants this issue off the table, so I’m optimistic that it will be resolved, but there will likely need to be some drastic changes somewhere,” Linden said.

(Updates with Nokia Siemens comment in fourth paragraph.)

@bloomberg.net