FCC wants wireless companies to ‘unlock’ your phone

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Posted: Sunday, December 8, 2013 12:00 am

Uncle Sam wants to hand you the keys to your cellphone.

A federal agency is pressing wireless phone companies to start “unlocking” customers’ phones.

A locked phone will work only on the network of the carrier that sold the phone. The change would make it easier for consumers to shop for service from other carriers.

“It’s one less obstacle for the consumer to face in deciding whether to move to another carrier,” said Jeff Silva, an analyst at Medley Global Advisors. “At the end of the day, that’s what it’s all about.”

There are other moves to make your mobile phone more mobile. A federal judge in Kansas recently asserted a subscriber’s right to sell a phone — including that new, upgraded one fresh out of the box.

Even some of the technological differences that make it hard to switch carriers without switching phones are eroding.

Wireless carriers say locking phones allows them to offer expensive new devices at discounted prices that customers can afford. And those devices are tuned specifically to the carrier’s network, which means they won’t work well on other networks.

“While the promise of universal compatibility by unlocking a device is enticing, we’re not quite there yet, and may never be,” said Bill Moore, whose company, RootMetrics, tests carriers’ networks for reliability and performance.

If vast numbers of cellphones are unlocked, the U.S. wireless industry may have to adjust its standard business model.

Though consumers can buy an unlocked phone for the full price of $650, most sign up for two-year service deals and get a discounted phone from the carrier. Cellphone companies charge us $100 or $200, but we pay the rest back as part of our monthly bills, or as an early termination fee if we don’t keep up.

To cement the deal, wireless carriers lock the phone so it works only on their network.

The carriers T-Mobile and AT&T are trying out different models.

Beginning today, AT&T customers will be able to switch to cheaper plans if they buy or bring their own phone. That includes paying for the device in installments through a frequent-upgrade plan. Those whose contracts have run out also qualify. Most customers will save at least $15 a month under the new AT&T plans.

T-Mobile now sells phones on an installment plan separate from the service. Consumers still pay for their phones through the carrier, and if they cancel the service, they owe the balance due on the phone. Because the cost of the phone is no longer part of the monthly bill, consumers can see more easily how much they’re paying for service.

Unlocking all phones would help consumers figure out how much they’re paying for their phone itself vs. service. Carriers could compete harder on prices or continue to emphasize faster networks, better coverage and even brand cachet.

The U.S. market would move closer to the cellphone deal that prevails in Europe. There, customers select and buy a phone first, often saving up to pay the full price, though discounted phones are available with service plans.

Mostly, Europeans stick with one phone longer but change carriers more often. Switching carriers is a relatively easy matter of buying a subscriber identity module card, or SIM card, from the new carrier and plugging it into the phone.

U.S. travelers with the right unlocked phone can move across Europe by swapping SIM cards along the way.

Holiday shoppers might keep the move to unlocking phones in mind as they check out the deals and devices available during the U.S. wireless industry’s busiest season.

The hurried push to unlock cellphones comes from the Federal Communications Commission. For eight months it has negotiated with the industry’s standard-bearer, CTIA-The Wireless Association.

“Enough time has passed, and it’s now time for the industry to act voluntarily or for the FCC to regulate,” the commission’s new chairman, Tom Wheeler, said in a recent letter to CTIA’s president, a post Wheeler once held.

Wheeler called for the industry to recognize consumers’ “full unlocking rights.”

The issue is also coming to the fore because early this year the Library of Congress dropped a waiver of copyright law that previously made it OK to unlock phones without phone company permission.

The change turned unlocking into a crime, said Derek Khanna, who led a national petition for unlocking rights that got the Obama White House to back unlocking.

“Our campaign said, ‘That doesn’t make sense. Let’s fix that,’ ” Khanna said.

Admittedly, no one is being arrested, but the threat is enough to quell the practice. Even those who say unlocking remains legal see the impact of the move by the Library of Congress.

“I would say forget all of that (copyright) law. It’s still legal for you to unlock it,” said Sherwin Siy, vice president of legal affairs at Public Knowledge, a consumer advocacy group.

“Me and some other experts saying that isn’t enough to make everybody comfortable enough that they’ll do it without fear of being sued.”

Most customers don’t know it, but wireless carriers have unlocking policies in place now.

Generally, carriers say they will unlock phones once customers have completed their service deals, paid for the phone through installments or met an early termination fee. Military personnel also can get their phones unlocked upon deployment.

But Wheeler in his letter called on wireless carriers to go a couple of steps further and notify customers when their devices are eligible for unlocking — or better yet to unlock them automatically without charging a fee.

Smaller and regional carriers strongly support unlocking phones, said Tim Donovan of the Competitive Carriers Association. They often can’t get makers of the newest phones to build models for their networks, but they could offer service to customers with unlocked phones from other networks.

For now, consumers’ best bet for changing networks is to change phones. It’s one reason devices change hands every day on Craigslist, Gazelle and other websites.

“As soon as that contract’s up, you own the phone,” said Linda Sherry, a spokeswoman for Consumer Action. “Our position is that you can do whatever you want with that phone.”

This article contains material from the Associated Press.

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