Phone Unlocking: Almost Legal, Still Not Easy

The good news for those that wish to jump carriers or unlock their device when traveling abroad is they will no longer face fines of up to $500,000 and a jail sentence of up to five years for doing so. The bad news is that the technical and monetary limitations that made it challenging to do so in the past have not gone away.

Since the beginning of 2013, an update to the Digital Millennium Copyright Act (DMCA) has made it illegal to "jailbreak," or unlock cellphones to make them usable on other networks, without the wireless operator's permission. The Library of Congress this week approved a bill to reverse that decision, and give customers the right to do so without facing copyright infringement charges.

The decision comes after pressure from Federal Communications Commission (FCC) Chairman Tom Wheeler to update the ruling, and months after all four major US wireless operators voluntarily agreed to new guidelines on alerting those customers in good standing that they can unlock their phones once the life of their contract is up. (See FCC: Unlock or We Regulate and Wireless Carriers Agree to Unlocking Rules.)

The new "Unlocking Consumer Choice and Wireless Competition Act" was passed by the Senate on July 15 and by the House on July 25. It will go into effect once signed by President Obama. Vermont Senator Patrick Leahy, who wrote the new Senate bill, writes in a statement that this will help give customers more flexibility in their choice of operators, but it's not as simple as it sounds.

As Jackdaw Research's Chief Analyst Jan Dawson points out, the environment for phone unlocking has changed quite a bit during the past couple of years, since you can now get a discount from all the major carriers for bringing your own phone. That said, the new ruling may be more of a moral victory than anything, because significant barriers still exist.

For the latest on operator policies, check out the dedicated mobile content channel here on Light Reading.

On the technical front, AT&T Inc. (NYSE: T) and T-Mobile US Inc. 's 3G GSM networks are incompatible with Verizon Wireless and Sprint Corp. (NYSE: S)'s 3G CDMA networks. All four are also using different LTE bands, so 4G LTE interoperability isn't guaranteed either.

What's more, most of the operators still have early termination fees (ETFs) that mean their customers would have to pay -- around $350 or more -- to pay off their phone if they were to make a switch. T-Mobile, for one, has offered to pay off switchers' ETFs, which could encourage some to make the jump, but it will be a big barrier for the other carriers. Dawson worries the new legislation may lead some people to assume these barriers have been removed, when they actually still remain.

"I think there are more reasons for people to want to unlock their phones than before, but there are still major barriers, including the technological incompatibility between Sprint and Verizon on the one hand, and AT&T and T-Mobile on the other, and the fact that you'll still have to pay to get out of your contract if you haven't paid off your phone yet," Dawson explains.

— Sarah Reedy, Senior Editor, Light Reading