The Corner

Unlocking the Unlocking Controversy

Per ABC:

You likely have a cellphone that you bought from a carrier, like AT&T, Verizon or Sprint, and that phone only works on that carrier’s cellular and data network — unless you “unlock” it.

That is a software process that allows the phone to work on other carriers if you put in a new SIM card or want to take the phone to another carrier for service.

If that sounds complicated to you and like something you wouldn’t bother with, then today’s news won’t matter to you. But if that’s something you’ve done before or have thought about doing, then you should know that starting today it is illegal to unlock a subsidized phone or tablet that’s bought through a U.S. carrier.

This strikes me as baffling overkill. Why not simply leave the question between the carrier and the customer? Beyond the enforcement of contracts, why involve the government at all? 

Critics of phone locking argue out that there is no need for any restrictions whatsoever, a) because phones are a customer’s “private property,” and, b) because unlocking their phone doesn’t release consumers from the contract they have signed but simply allows them to use them on other networks as well. The latter is certainly true. When moving between the United States and England, I switch out my SIM card to avoid expensive roaming charges. A locked phone would prevent me from doing this, forcing me to use my carrier’s costly service when abroad, which would be all the more annoying given that my phone being unlocked does nothing to the two contracts I have; it simply allows me to switch between them.

But surely the answer here is for customers who object to having their phones locked simply to refuse to agree to any contract that requires that. Or to buy an unlocked phone. Either way, what does the state have to do with it? 

This principle works both ways. If they so wish, cell carriers should be able to require that customers sign contracts in which they promise not to unlock their phones. There’s nothing inherently wrong with locking a phone if both parties are happy with it. Currently, smartphone deals tend to work like this: The customer gets an expensive phone (an iPhone 5 costs $650) for a cheap price ($200) if they buy one at the same time as they sign a service contract. The cell companies are happy to subsidize the upfront purchase of the smartphone because they’ll make that money back over the duration of the contract, or via a hefty termination fee. Customers who buy smartphones from carriers do not buy those phones without strings attached to the purchase because termination fees, contracts, and other restrictions apply as a the cost of upfront subsidization. And if carriers wish to make a customer’s phone remaining locked a part of that deal, then I don’t see what that has to do with anyone but the customer and the carrier. Certainly, there should be no law prohibiting customers and carriers from agreeing that the provided phone must be locked.

CBS reports that:

The new rule won’t affect every phone user: Verizon’s iPhone 5 comes out of the box unlocked already, and AT&T will unlock phones once they are out of contract….The DMCA only permits phone unlocks that have been approved by the phone carrier beforehand.

Sure, carriers can unlock phones if they so wish. But the new rule means that Verizon and AT&T could change their minds and there is nothing that future customers can do about it. More to the point, it means that the unlocking ball is entirely in the manufacturer’s courts — and long after a contract has expired. Why is the federal government tipping the scales toward the manufacturers? Why is the presumption not that a customer can unlock a phone that he has bought unless it is otherwise stated in the contract he has signed? It’s beyond me. 

As the San Francisco Chronicle’s James Temple has argued, ultimately this is about “carriers keeping people on their networks and squeezing the aftermarket for phone sales. In other words: It’s about enormously profitable companies leveraging the legal system to make more money still, at the expense of consumers.” I think he’s right. There’s really no reason that a phone company should be keeping you locked into their services after your contract has expired, and even less reason that the government should help them to do it.


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