In the U.S., the Federal Communications Commission (FCC) is considering a rule requiring carriers to unlock phones within 60 days of purchase. According to Wired, two of the largest carriers, AT&T and T-Mobile, are advising caution, saying it could negatively impact consumers. In a recent filing to the FCC, T-Mobile explains: “If the Commission mandates a uniform unlocking policy, it is consumers — not providers — who stand to lose the most.”
It continues: “Consumers risk losing access to the benefits of free or heavily subsidized handsets because the proposal would force providers to reduce the lineup of their most compelling handset offers.” In a note to the FCC, AT&T said that “requiring providers to unlock handsets before they are paid off would ultimately harm consumers by creating upward pressure on handset prices and disincentives to finance handsets on flexible terms.”
It goes on to say, “If the FCC implements any rules, it should maintain existing contractual arrangements between customers and providers, ensure that providers have at least 180 days to detect fraud before unlocking a device, and include at least a 24-month period for providers to implement any new rules.”
In other words, the carriers claim that locked phones are good for customers and lead to lower prices. Consumer advocates who support the new rule think the opposite. They believe the proposed rule would lead to more choice and lower prices. Unlocked phones give consumers the ability to easily move between carriers as they see fit.
The new rule was proposed earlier this year. The agency is now seeking public comments before deciding whether to approve it. The proposal requires “all mobile wireless service providers to unlock handsets 60 days after a consumer’s handset is activated with the provider, unless within the 60-day period the service provider determines the handset was purchased through fraud.”
When the new rule was proposed, the FCC criticized T-Mobile’s decision to lock prepaid phones for a year. The third-largest carrier in the U.S. after Verizon and AT&T, T-Mobile unlocks fully postpaid phones that have been active for at least 40 days. Its 365-day lock on prepaid users has led to many angry customers, especially after it raised prices earlier this year.
Current A&T policies allow the unlocking of paid-off phones after 60 days for postpaid users and six months for prepaid users. Verizon is the most compliant with the FCC’s new rules among the three major carriers. It unlocks phones automatically after 60 days for both prepaid and postpaid users.
Carriers lock phones for various reasons, including reducing customer churn, allowing them to recoup subsidies they often use to gain new customers, and preventing fraud. When a phone is locked, however, users have a more difficult time switching carriers and can ultimately be forced to pay higher costs since they must continue to pay for service while paying off the phone. Unlocking a phone can also be time-consuming and may involve contacting the carrier or paying a fee.
Consumer advocates that support the new rule include Public Knowledge, New America’s Open Technology Institute, Consumer Reports, the National Consumers League, the National Consumer Law Center, and the National Digital Inclusion Alliance.
The FCC has not established a timeline for implementing the new plan. However, with a new U.S. president taking office in January, changes to the board’s composition are expected. This increases the likelihood of a vote occurring before the end of the year.
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