Wireless phone customers may soon be able to switch carriers while keeping their same wireless mobile devices. Though it is currently illegal for a consumer to unlock a cellphone without the carrier’s permission (thereby allowing it to be used on other wireless networks), just two weeks ago the five largest wireless carriers all agreed to allow consumers to unlock phones once the consumer’s contract with that carrier has expired.
Mobile phones may be purchased either “locked” or “unlocked.” A locked device contains a subscriber identification module (SIM) lock that only allows a specific type of SIM card to be used. Thus, a locked phone purchased from Verizon Wireless will only work with a Verizon SIM card; SIM cards from other carriers will not work with the phone. An unlocked phone gives the consumer several advantages, including the most flexibility in choice of wireless carrier and the possibility of avoiding overseas roaming charges. So why do consumers still buy locked phones? The answer is simple—price. Locked phones are subsidized by the carrier. In return for the subsidized price, the consumer must enter into a service contract with that carrier. So in choosing between a locked or unlocked phone, the consumer must weigh the price of the phone against the benefits of an unlocked phone.
In a short time, mobile phone unlocking has come a long way. The Digital Millennium Copyright Act (DMCA), signed into law in 1998, protects copyrighted digital works. It criminalizes the circumvention of controls put into place to protect such material. Every three years, the Librarian of Congress determines exemptions to the DMCA’s anti-circumvention protections based on recommendations by the Register of Copyrights. In 2006, the Librarian of Congress, acting pursuant to powers granted under the DMCA, determined that consumer unlocking of mobile phones—also known as jailbreaking—for use on other networks qualified for an exemption because the lock did not appear to be used to protect access to copyrighted material. Instead, the lock was being used to limit a consumer’s choice of wireless carrier. However, in October 2012,the Librarian chose not to extend this exemption for another three years because unlocked phones had become more available in the market. This change meant that unlocking a wireless mobile device purchased after January 26, 2013, without carrier permission would be illegal and punishable by a $2500 fine for a civil suit or $500,000 fine plus up to a five-year prison sentence for criminal cases where the phone is unlocked for commercial gain.
Just a month ago, FCC Chairman Tom Wheeler, in one of his first acts as Chairman, sent a letter to Steve Largent, president and CEO of CTIA – The Wireless Association, an industry group representing wireless carriers’ interests, asking that wireless carriers permit consumers to unlock their wireless phones under certain conditions. He essentially gave the industry the option between voluntary self-regulation, creating an agreeable unlock policy, or future FCC regulations.
In response, on December 12, 2013, the five largest wireless carriers (AT&T, Sprint, T-Mobile, U.S. Cellular, and Verizon) agreed to a set of six standards related to unlocking wireless mobile devices. These six standards are:
- Each carrier will provide a clear and concise unlocking policy that is readily accessible.
- Upon request, carriers will unlock devices or provide unlock information to customers, former customers, or other eligible owners who have completed their postpaid service contract, paid off their device financing plan, or paid an early termination fee.
- Upon request, carriers will unlock prepaid devices at the latest one year after initial activation.
- Carriers will either notify postpaid customers or automatically unlock the device when a device becomes eligible for unlocking. Unlocking will be at no charge for customers and for a reasonable fee for non-customers or former customers.
- Carriers must respond to an unlock request within two business days.
- Carriers will unlock devices for any deployed military personnel who are customers in good standing.
This new policy is a huge win for mobile customers. No longer are customers required to purchase a new phone and/or sign a new contract when switching carriers. After fulfilling their contracts, wireless customers will now be free to shop for the best service. This may result in more competitive pricing as carriers attempt to lure customers from their competitor carriers.