A knotty landscape for CDMA handset flashing

Mike DanoOK, imagine this scenario: You've got a CDMA Motorola Razr V3M--which you like just fine and don't really want to replace--you're at the end of your service contract, and you're intent on switching carriers. What to do?

If you owned a GSM Razr, you could potentially contact your carrier to get your phone "unlocked," whereby your device would no longer be tied to the carrier that subsidized the cost of the gadget. Then you could take your phone to any other provider that offered service over the proper spectrum bands and, if that carrier were able to provision your device and provide a suitable SIM card, you could continue using your existing phone on that new network.

But, as many industry insiders know, there are no SIM cards on the CDMA side of things. Thus, there is no easy way to move from one CDMA network to another, as SIM cards allow GSM users to do.

So, in the CDMA Razr scenario mentioned above, you would be stuck with your existing provider--unless you're willing to get a new phone. Right?

Well, not quite. CDMA "flashing" is offered commercially by MetroPCS and quietly by Verizon Wireless--both CDMA operators--and allows users to in some cases keep their existing phones when switching over to MetroPCS or Verizon Wireless service.

On its MetroFLASH page, MetroPCS lists well over a hundred phones that it will flash onto its network. The carrier charges a one-time $40 fee, and warns that flashing only covers voice and text services--data-hungry users are out of luck. When I asked MetroPCS about the service, they declined to provide any further information, including how many devices they have flashed since launching the service in 2008.

Verizon Wireless does not advertise its flashing services, and I only found out about the offering by pinging one of the carrier's public relations folks. "In some cases, if a device has been approved for our network, a customer can bring it from another carrier and activate it on our network, but that covers mostly voice services, not data," wrote Verizon's Debi Lewis, who did not provide further details, including which devices are covered, how much it costs and how many devices have passed through Verizon's flashing program.

I also asked the nation's other two major CDMA players--Cricket carrier Leap Wireless and Sprint Nextel--but neither offers handset flashing services.

Interestingly, the whole CDMA handset flashing issue came into tight focus this week following news that Sprint's Boost Mobile prepaid division will soon start offering CDMA phones for its monthly unlimited service at $50 (or $60 for BlackBerrys). Pali analyst Walter Piecyk noted that Sprint CDMA subscribers won't be able to bring their existing CDMA phone onto Boost--despite the fact Boost and Sprint phones are offered by the same company (Sprint) and run on the same network (CDMA).

"The reason appears quite clear. Sprint likely doesn't want $99 Simply Everything customers converting down to the less expensive $60 BlackBerry Boost Unlimited Plan. Plus these new phones can block margin-eroding roaming onto Verizon's network while existing CDMA postpaid phones allow it," Piecyk wrote, adding: "The customer owns the device, why should they have to buy a new one to get the cheaper rate plan?"

I asked Current Analysis' Avi Greengart, another whipsmart analyst, about the whole handset flashing thing. Greengart said there are a number of reasons wireless carriers in general prefer to stay away from flashing and reflashing, including possible copyright violations (indeed, Virgin Mobile recently sued MetroPCS over flashing Virgin handsets) as well as the confusion it might stir up among subscribers and the fact that manufacturers often tweak their products to adhere to the particulars of a given carrier's network.

Nonetheless, I suspect the issue is poised to crash into the limelight, thanks to a growing chorus of riled consumer advocates and a newly proactive FCC. After all, the agency is already probing the wireless industry's competitive practices, including handset exclusivity arrangements and early termination fees (both of which play into the flashing issue). If wireless players don't take the initiative and address the issue out in the open now, they may be forced to do so in the near future. --Mike

P.S. Editor in Chief Sue Marek and her guests Avi Greengart of Current Analysis and Maurice Thompson of Verizon will be discussing the highs and lows of last week's Consumer Electronics Show in Las Vegas. What wireless firms made the biggest splash? Weigh in with your opinions to these poll questions (Sue will discuss the answers during tomorrow's Webinar at 2 p.m. EST).

>>What was the most significant news of CES?

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>>If you went to CES, what was the primary reason?

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