FCC: Unlock or We Regulate

The FCC's new chairman, Tom Wheeler, is taking the wireless operators to task over their cellphone unlocking policies in his first month on the job. He has told them to get moving on addressing consumers' rights to unlock their phones once their contracts are fulfilled -- or they will face regulation.

In a letter to CTIA president Steve Largent, Wheeler wrote that the Federal Communications Commission (FCC) and the CTIA have been working for eight months to craft an amendment to the Consumer Code on device unlocking. However, "enough time has passed, and it is now time for the industry to act voluntarily or for the FCC to regulate." (See: Nimble? The FCC? )

An update to the Digital Millenium Copyright Act (DMCA) that went into effect in January made it illegal to jailbreak cellphones without the wireless operator's permission. Violators face fines of up to $500,000 and five years in prison. Wheeler's goal is to have the act amended and to work out the full unlocking rights policy in the CTIA Consumer Code before the December holiday season.

The FCC boss -- who has promised to serve the needs of the American people, rather than the technology industry -- says he wants operators to:

  • Provide a clear, concise, and readily accessible policy on unlocking
  • Unlock mobile wireless devices for customers, former customers, and legitimate owners when the applicable service contract, installment plan, or ETF has been fulfilled
  • Notify customers when their devices are eligible for unlocking and/or automatically unlock them when eligible, without an additional fee
  • Process unlocking requests or provide an explanation of denial within two business days
  • Unlock devices for military personnel upon deployment

The FCC and the CTIA are getting hung up on the provision for notifying customers about unlocking eligibility. Without this, Wheeler wrote, "any voluntary program would be a hollow shell."

After the DMCA update, most of the US operators updated their terms of service to allow for unlocking if the customer is in good standing and out of a contract. Wheeler is aiming to make the process easier and more transparent for everyone, including wholesalers that unlock many devices at once.

Scott Bergmann, vice president of regulatory affairs for the CTIA, said in a written response that it continues to work with the FCC on the process, but he made no promise of meeting the holiday deadline. He also reiterated that consumers can already choose from a number of unlocked devices, and that unlocking doesn't necessarily mean the freedom to network hop.

"While CTIA supports giving consumers a robust set of options, it is important for consumers to note that an unlocked phone doesn’t necessarily mean an interoperable phone, given the technological and engineering realities of wireless networks," Bergmann wrote.

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas 11/15/2013 | 12:49:19 PM
unlocking As the CTIA says, unlocking your device doesn't guarantee that it will work on every network you want it to. So, why do they care if consumers do then?
DOShea 11/15/2013 | 1:45:12 PM
Wheeler I guess the former CTIA chief must have felt he had to make something wireless-related an early order of business, though the current CTIA chief had to know this was coming.

Sarah Thomas 11/15/2013 | 1:48:45 PM
Re: Wheeler Part of it is probably Wheeler wanting to look good and consumer-friendly out the gate, but the fact that it has taken 8 months is a little silly. Why would the CTIA have a problem with the notification clause? Is it hoping by not telling consumers, no one will know to take advantage of it?
Liz Greenberg 11/15/2013 | 1:55:04 PM
Re: Wheeler I think that they hope to keep folks locked in for the rest of their lives. One solution is to drop subsidies and pay full price for an unlocked phone. Realistically given the number of LTE bands network hopping is going to get more difficult. Unlocking could let consumers sell their phones after they buy new ones.
DOShea 11/15/2013 | 1:55:16 PM
Re: Wheeler True, they are trying pretty hard to keep general customer ignorance of unlocking intact, maybe thinking that if they do, only the real gadget nerds will be the ones doing it.

On another note, I wonder how the congressman-turned-lobbyist feels about getting scolded by the lobbyist-turned-government official.
RitchBlasi 11/15/2013 | 3:13:14 PM
Unlocking I don't think Wheeler is asking for anything major here.  After two years, the device subsidy is collected - through a contract or "no-contract, financiang" - so I don't see the issue here.  This is like paying off a car - the financing company name is taken off the title and it becomes free and clear.  Additionally, for mobile users, it offers the flexibility to use the unlocked device when traveling overseas, avoiding the high roaming charges mobile users have to pay. 
Sarah Thomas 11/15/2013 | 3:16:03 PM
Re: Unlocking I agree, Ritch. That's why it's strange CTIA is dragging its feet so much. He's not asking for a big change in how things are done, just transparency and clarity about it. It's shady if operators won't agree to that.
Sarah Thomas 11/15/2013 | 3:18:00 PM
Re: Wheeler The US operators are moving in that direction, kickstarted by T-Mobile, although it's not the best deal on AT&T or Verizon. It doesn't seem like it'd be that hard to get an operator's permission to unlock if you meet the criteria, but I've never tried. Have you?
RitchBlasi 11/15/2013 | 3:20:13 PM
Unlock From an operator perspective, it's always good to keep them locked, right?  I knew the proactive notification would be the sticking point.  It's almost like receiving a "get out of jail" card.
Sarah Thomas 11/15/2013 | 4:35:18 PM
Re: Unlock Yeah, makes sense in their locked-down minds. Although, I imagine the kind of people who would want to unlock their devices are a bit more tech savvy and looking for that opportunity. I wonder how many would do it on a whim, becuase they realize they can?
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