Monday, July 1, 2024

FCC Proposes Carriers Unlock All Phones Within 60 Days

FCC Proposes Carriers Unlock All Phones Within 60 Days 

Cellphone service carriers would have to unlock customers’ cellphones within 60 days after activation, under a new proposal issued by the U.S. Federal Communications Commission (FCC) on June 27.

“New unlocking rules would allow consumers the freedom to take their existing phones and switch from one mobile wireless service provider to another more easily, as long as the consumer’s phone is compatible with the new provider’s wireless network,” the agency said in a statement.

Some cellphones come with software that prevents the device from being used on different mobile networks. This software restricts the phone to the network provider selling the device. Unlocking the phone allows consumers to use different mobile networks.

The FCC said that the unlocking of phones also opens the door to increased competition in the wireless services market, gives consumers more flexibility when switching service providers, increases competition by reducing consumers’ switching costs, and reduces customer confusion by applying the same unlocking rules to all mobile service providers.

FCC Chairwoman Jessica Rosenworcel said, “When you buy a phone, you should have the freedom to decide when to change service to the carrier you want and not have the device you own stuck by practices that prevent you from making that choice.”

In a March 19 letter to the FCC, telecommunications firm Verizon warned the agency against imposing requirements on carriers.

Providers tend to lock mobile phones to their network as the devices are sold at a discounted price. In exchange, buyers are required to commit to a network plan, typically lasting months or years. These agreements also carry an early termination clause mandating a penalty if the deal is ended before the expiry of the commitment period.

“An unlocking requirement may discourage a carrier from deeply discounting a phone because it cannot recoup its subsidy if a customer immediately moves to another carrier,” Verizon said at the time.

“Providers rely on device locks to sustain their ability to offer such subsidies. Device locking periods, in fact, may greatly benefit low-income consumers because they make devices more affordable, lowering the barrier to entry to mobile service.”

The proposal will also seek public comments on the impact of the 60-day unlocking rule on service providers’ incentives to offer discounted phones.

The FCC is scheduled to vote on the proposal at its July 18 open meeting.

T-Mobile Deal

Phone unlocking was a key issue in the recently concluded acquisition of Mint Mobile by T-Mobile. The deal was announced in March last year, with T-Mobile putting up $1.35 billion to acquire Ka’ena Corporation, which owned Mint Mobile and other brands. The deal was completed on May 1, 2024.
In February, four consumer groups wrote to the FCC, asking that the commission require T-Mobile to commit to a shorter unlocking period for all devices on its network.

Locking phones not only makes it more difficult for consumers to change carriers but also reduces the number of devices available in the secondary market, the groups argued. Smaller carriers and new entrants can be disadvantaged in the marketplace due to a lack of handset availability, the letter said.

“Locked phones, particularly those tied to pre-paid plans, can disadvantage low-income customers most of all, since they may not have the resources to switch carriers or purchase new phones. Unlocked phones also facilitate a robust secondary market for used devices, providing consumers with more affordable options.”

On April 23, T-Mobile wrote a letter to the FCC, stating that within 60 days of closing the transaction, the company will implement unlocking for all Mint mobiles that are activated on the T-Mobile network.

Back in 2014, the CTIA, which represents the U.S. wireless communications industry, adopted six standards for mobile device unlocking.

One policy states that carriers, upon request, will unlock mobile wireless devices or provide the information required to do so once the contract period under which the device was purchased ends.

The FCC advises people who are looking to unlock their phones to speak with their service provider to find out their eligibility.

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