WASHINGTON Dec 12 U.S. wireless carriers are
hammering out the final details of a deal with the Federal
Communications Commission to adopt new policies to make it
easier for consumers to "unlock" their mobile phones for use on
a competitor's network.
The agreement, expected soon, would ensure that providers
notify customers about the eligibility of their phones for
unlocking - by text message, for example - and could also cover
some pre-paid phones, industry sources say.
The deal would also require carriers to process or deny
unlocking requests within two business days, according to FCC's
U.S. wireless carriers often "lock" smartphones to their
networks as a way to encourage consumers to renew their mobile
contracts. Consumers often get new devices at a heavily
subsidized price in return for committing to longer contracts.
The new deal would assure consumers that they could get
their phones "unlocked" at the end of their contract and make
the process more uniform among carriers.
The final sticking points in reaching the agreement among
carriers and FCC were said to include questions on how fast the
new policy would be rolled out, how pre-paid phones would be
handled, and how to keep unlocked phones off of black markets.
Top providers like Verizon Wireless, AT&T Inc,
Sprint Corp and T-Mobile US have long allowed
consumers to unlock devices and take them to another network at
the end of a contract term - commonly, two years - though the
process varies by company and can be quite painstaking.
What changed in 2013 was an unexpected ruling from the
Library of Congress, which oversees U.S. copyright law and
reviews exemptions every three years, that effectively made
The ruling surprised many telecom observers, outraged phone
users, and finally landed on the White House's agenda thanks to
an online citizen petition that gathered 114,322 signatures,
more than the 100,000 needed to spur a response. And in its
response, the White House sided with the petitioners.
With that, unlocking turned into a top 2013 policy matter
for new FCC Chairman Tom Wheeler, a former top wireless industry
lobbyist for whom it presented an opportunity to establish a
On Thursday, Wheeler is expected to address unlocking at a
House of Representatives hearing and later at the FCC's regular
meeting, where it is on the agenda.
Unlike cell phone operators in other countries, U.S.
wireless carriers often lock smartphones to make it harder for
customers to leave their network. It helps sustain the subsidy
business model of the industry, in which consumers get steep
discounts to buy pricey devices like Apple Inc's iPhone
in exchange for higher monthly fees.
Technically, too, devices sold to U.S. consumers are not
compatible across all networks. AT&T and T-Mobile use similar
technology standards, while another type is used by Sprint and
Verizon. Some services may not work as well on phones from
Verizon is the only carrier whose phones generally come
unlocked at the beginning of a contract. The company is bound to
do so through an earlier deal it had struck with the FCC.
While Wall Street has paid little attention to the unlocking
saga, the issue has turned into a policy and consumer black eye
for the wireless industry, which was perceived to be on the
wrong side of the debate over consumers' rights and freedoms.
The wound is practically a self-inflicted one as lawyers
from the wireless association CTIA were the ones to stir the
hornet's nest at the Library of Congress.
U.S. copyright law had an exemption allowing for unlocking
of devices since 2006 but in the new triannual review in 2012,
the CTIA lawyers successfully challenged it.
Despite opposition from the Commerce Department's telecom
policy advisors, the CTIA convinced the Library of Congress that
the exemption was no longer warranted. They argued that new,
unlocked phones were widely available and that the carriers'
unlocking policies were already flexible.
CTIA has pushed back on the notion it acted without
direction from its members, but Jot Carpenter, vice president
for federal affairs, acknowledged that the legal battle spun
into a major policy debacle unexpectedly.
"The industry won a legal argument but failed to anticipate
it morphing into a policy argument," he said in an interview. "I
think there are a lot of lessons to be learned from that."