Locked phones in peril


Locked phones in peril

Thanks to the iPhone, the whole issue of locked devices has come to the forefront. Customers are demanding to have a say over how they can use the device, and they keep searching for ways to make sure they do. And Apple keeps coming up with updates to make sure they don't.

The issue has spurred lawsuits. Last week a federal suit and a state suit both accused AT&T and Apple of unfair business practices and violations of antitrust, telecommunications and warranty laws. The suits allege that by not letting consumers modify their iPhones so that they work on other networks, the two companies have conspired to maintain a monopoly. The suits also claim that the companies are unlawfully constraining consumer choice by not allowing users to "unlock" their iPhones and intentionally issuing updates that effectively disable unofficial third-party programs. 

Interestingly, a case involving T-Mobile USA in California could have an interesting impact on the whole issue. T-Mobile lost a California Supreme Court bid last week to end a lawsuit challenging the company's early-termination fees and its practice of locking down phones to work only on T-Mobile's network. The refusal clears the way for the lawsuit that is seeking a court injunction keeping T-Mobile from collecting its $200 early termination fee and to reveal the effect of the software locks it put on its phones. The lawsuit also seeks to have T-Mobile offer to unlock the handsets so consumers can switch to a different carrier without buying a new phone.

If the class action suit against T-Mobile is successful, mobile operators in California could be required to unlock cell phones when customers ask. T-Mobile argued that its service agreement keeps customers from filing class-action lawsuits, but the lower court sided with the plaintiffs--that the matter was in the public interest.

The tide certainly appears to be turning when it comes to locked devices. Not only are we seeing lawsuits, but market forces are coming into play. Sprint Nextel plans to allow any WiMAX device on its network. Nokia and Motorola have begun selling unlocked phones in the U.S.

Of course, the impact of unlocked phones isn't particularly great considering the technology fragmentation of operators in the U.S. There aren't that many alternatives for an unlocked phone. But it may give customers a false sense of security and pave the way for the inevitable: open access. -Lynnette