Sprint Policy Change Spells Trouble for MVNOs

A change in Sprint's policy on activating devices could affect many of the independent mobile virtual network operators that use its network and which have been encouraging their customers to source their own devices.

Sprint Corp. (NYSE: S) changed its device activation procedure on February 15 to include "a Financial Eligibility Date (FED) for any device leaving Sprint to be activated on another carrier or service provider such as a mobile virtual network operator (MVNO)," a Sprint spokesman tells us. This includes many of the independent MVNOs that lease space on the Sprint network. (See Sprint Builds an MVNO Factory.)

The result is that many Sprint MVNO customers who have bought used phones are not passing the activation phase they previously would have completed: As a result, they have found themselves locked out of the network.

"Sprint is blocking any phone that has any type of credit balance from a previous owner's account from being activated," Stephen Stokols, CEO of FreedomPop , an MVNO using the Sprint network, explains to Light Reading. "It impacts a big majority of aftermarket devices."

The move is not good news for many of the independent operators that run on the Sprint network and which have encouraged users to bring their own devices to the network. Sprint currently has more than 90 MVNOs on its network.

The MVNOs that Light Reading has contacted so far -- FreedomPop and Ting -- say they are now finding ways to certify more devices.

"FreedomPop procures, holds and sells devices to most new subs," notes CEO Stokols, saying that the operation will not be "that impacted" by the change.

Ting definitely suffered in the first quarter because of the change. The MVNO says it has now worked with Sprint to ensure more of its devices get past the FED.

Ting tells us in an email:

    When Sprint implemented the financial eligibility date (FED) check, about 70% of devices were failing and only about 30% would get past using the Ting compatibility checker. The net FED cast was much too wide. Since then, we've worked closely with Sprint and reversed the numbers: More than 70% pass and less than 30% fail.

Customers posting messages on the popular Howard Forums mobile phone chatboard, however, suggest that the Ting and FreedomPop are among the better compatibility checkers for Sprint devices and that more than 50% of the devices previously verified by Sprint are now failing the FED check. This includes devices bought new or sold used in good standing, some posters assert.

So, at present it is not entirely clear how badly affected many of the MVNOs that operate on the Sprint network will be.

"The addition of the FED validation ensures ineligible devices cannot slip through the activation process and ultimately provides an increase in the volume of available devices for Sprint MVNOs," the Sprint spokesman said of the FED change in an email.

Sprint says that that the change "was implemented in accordance with Sprint's voluntary [US industry association] CTIA Unlocking commitment." The government has also been nagging the major operators to make it easier for US consumers to unlock their devices and move between carrier networks. (See FCC: Unlock or We Regulate.)

— Dan Jones, Mobile Editor, Light Reading

DanJones 5/29/2015 | 2:27:07 PM
Re: FED/FEC It seems to applicable under the CTIA unlocking rules. I asked the other major carriers if they had similar FED/FEC rules and so far AT&T has replied saying "no."
kq4ym 5/29/2015 | 11:22:40 AM
Re: FED/FEC Will Sprint be accused of changing the rules in mid game I wonder. Or are the numbers affected small enough in the market that this is a legitimate move by Sprint? It does bring some interesting questions and those user comments noted are telling too.
DanJones 5/28/2015 | 11:09:33 AM
FED/FEC Some of the comments on the Howard Forum I linked to in the story are particularly interesting.
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