RIM considers compensating carriers in wake of BlackBerry outage

Research In Motion (NASDAQ:RIMM) co-CEO Jim Balsillie said the company is considering compensating wireless carriers as a result of last week's three-day BlackBerry service outage, the largest in RIM's history.

Besides the carrier compensation, RIM is also providing affected users with free premium applications as well as offering one month free of technical support to corporate customers, Balsillie told Bloomberg. "We're very focused on these carriers and making sure they're satisfied with the service operation and making sure we comply with all of our agreements with them and making sure we have their trust for the service going forward," he said.

RIM said Monday it will offer a series of premium mobile apps valued at more than $100 as free downloads from its BlackBerry App World storefront. The offer is an effort by RIM to compensate frustrated BlackBerry users. The outage lasted around three days in Europe, the Middle East, India and Africa; one and a half days in Latin America and Canada and one day in the United States.

RIM has said the outages were the result of a core switch failure in RIM's network infrastructure, which encrypts and routes email messages and other data, making it more secure. Although RIM's system is designed to failover to a back-up switch, it did not work as previously tested, creating a backlog of data. This caused RIM to "throttle" service in the affected regions, which then created more disruptions in regions not previously affected, including North America.

In a separate interview with the Wall Street Journal, Balsillie said it is still too early to assess the financial impact of the outage or if it has caused RIM to lose customers. "Nothing's been specifically brought to my attention," he said regarding customer defections. "It would be a little soon for something like that to happen, if it were to happen."

The outage came days ahead of the global launch of Apple's (NASDAQ:AAPL) iPhone 4S, and Apple said it sold 4 million devices last weekend. The outage also came ahead of the start of RIM's BlackBerry Developer Conference, which starts today in San Francisco. At the event RIM is expected to focus on software enhancements for its PlayBook table and to preview its first smartphones running QNX software. The first QNX phones will arrive early next year and RIM is hoping they can help the company reverse its market share declines, particularly in North America.

"You're going to see a number of things that are really catapulting [the] application and development community," Balsillie told the Journal.

For more:
- see this Bloomberg article
- see this WSJ article (sub. req.)

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