Indonesia has threatened to cut data services used by millions of BlackBerry customers, the industry body said, in an ongoing spat over infrastructure and government access to information.
The industry regulator said it would block internet services to the smartphones in the biggest market for Research In Motion (RIM) - which makes the BlackBerry - outside North America if RIM did not comply with its demands.
Canada-based RIM had agreed in January to fulfil four requests made by the communications and information technology ministry.
"RIM is supposed to have a licence to provide internet services, and the government will only grant them one when they have fulfilled all four requests.
"If they don't, we'll have to cut their data services," the commissioner of the Indonesian Telecommunication Regulatory Body, Heru Sutadi, told AFP.
The requests included setting up an aggregator that would effectively reduce costs for local service providers, but authorities claimed Saturday RIM had rolled back on that commitment.
"We had a meeting with RIM on Thursday to talk about progress since January. They have fulfilled some requests, but we are disappointed they have not agreed to establish an aggregator in Indonesia," Sutadi said.
The government also requested that RIM set up customer care centres, block pornography from its service, and assist the government in accessing encrypted data on users' phones.
RIM said, however, that it has addressed all the requests and that it is looking at new multimillion-dollar investments in Indonesia.
It has set up a router in Singapore to which some Indonesian carriers have connected, and said that this fulfilled the government's aggregator request as it had only asked for a centre in the region.
The firm said it was receiving "mixed messages". "We have never been formally asked to build a centre in Indonesia," RIM's East Asia managing director Gregory Wade told AFP.
Sutadi said the industry body was concerned by the state of play on government access to encrypted data.
"RIM told us they were working with law enforcement agencies to ensure they can access the information, but they could not tell us who exactly they were working with," Sutadi said.
Indonesia is RIM's biggest market outside North America, with shipments of BlackBerry smartphones expected to surpass nine million units by the year end.
The government's threats come just two weeks after a BlackBerry promotional event turned disastrous.
More than 40 people were injured and 20 were knocked unconscious or fainted in a crush when thousands rushed toward a shopping mall hoping to get their hands on one of 1,000 new BlackBerry Bold 9790 model going at half price.
Police named RIM's country president-director Andrew Cobham and consultant Terry Burkey as suspects in the case.