NTIA pushes FCC to mandate free cell phone unlocking

At the Obama administration's direction, the National Telecommunications and Information Administration petitioned the FCC to mandate that carriers unlock mobile phones and tablets free of charge and let customers who have met their contractual obligations switch to another carrier.

"Americans should be able to use their mobile devices on whatever networks they choose and have their devices unlocked without hassle," NTIA Administrator Lawrence Strickling said in a statement. The NTIA also added in a statement that the proposed rule "would shift the burden associated with device unlocking onto the carriers that imposed the locks, and ensure they consistently do so in a way that is both expeditious and transparent."

NTIA said that upon request, carriers should unlock phones for customers free of charge. Carriers can comply "by providing authorization and sufficient information, software, or other tools to another provider of commercial mobile radio service or commercial mobile data service, so that the other provider, an affiliate, or an authorized agent can perform the unlocking sought by the customer or" any person who lawfully obtained the wireless device from the original owner.

"By giving consumers greater freedom to choose among alternative mobile service providers and use wireless devices that they lawfully acquire from others, the proposed rule would both increase competition in the mobile services market and enhance consumer welfare," NTIA wrote in its petition. "Consequently, its adoption would plainly promote the public interest."

The FCC declined to comment, according to Bloomberg.

NTIA, an arm of the Commerce Department, said it is not looking to disrupt the carriers' business model in which they sell subsidized devices bundled with service in exchange for a two-year contract. "Operators can protect that business model, however, without refusing to unlock wireless devices upon request," NTIA wrote. "Operators can--as they currently do--effectively prevent consumers from subverting that model through long-term service contracts, enforced by penalties or fees for early termination."

"As long as a consumer continues to adhere to any existing service agreement--or pays the specified fees or penalties for prematurely terminating that agreement--the unlocking rule's benefit for consumers does not unduly burden the original providers," NTIA added. "Further, a greater ability to experiment with other service providers would likely increase overall competition in a locality."

The hubbub over unlocking intensified in March after the Obama administration said it supports consumers who want to unlock their mobile phones without fear of breaking the law. The administration urged legislative fixes to remedy a recent government ruling on the topic that removed protections for people who do unlock their phones. The White House's statement was prompted by a petition on the issue that received more than 114,00 signatures.

The ruling on unlocking, from the Library of Congress, concerns the Digital Millennium Copyright Act, and was issued last October. In effect, the Library of Congress, which governs copyright law, said that there is no copyright exemption for unlocking cellphones, making unauthorized unlocking potentially illegal.

"While we have not yet reviewed NTIA's petition on cellphone unlocking filed today, CTIA welcomes the opportunity to work with the Administration and the FCC to highlight the wealth of device options that exist for U.S. consumers today and carriers' transparent and competitive unlocking policies," Scott Bergmann,  CTIA's  vice president of regulatory affairs, said in a statement. "Of paramount importance to this discussion is educating policymakers and consumers about the numerous unlocking policy options when considering wireless providers or service plans, as well as the technological realities that exist among different phones and different carriers."

As CTIA notes, an unlocked phone is not necessarily an interoperable phone. Phones that work on AT&T Mobility's (NYSE:T) network are unlikely to work on Sprint's (NYSE:S) network since the two carriers use different technologies and spectrum bands.

Bergmann urged all interested parties to join CTIA in supporting the legislation being advanced by the House Judiciary Committee's chairman, Rep. Bob Goodlatte (R-Va.). "The Goodlatte bill aims to alleviate consumer confusion or uncertainty from the 2012 decision of the Librarian of Congress and to prevent the bulk unlocking of handsets and arbitrage of the handset subsidy system, which can harm consumers and facilitate the sale of stolen smartphones," Bergmann said.

For more:
- see this NTIA petition (PDF)
- see this NTIA release
- see this Washington Post article
- see this The Verge article 
- see this Bloomberg article

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