Small operators oppose unlocked devices

NEW ORLEANS--Many Tier 3 operators dislike the notion of selling customers unlocked handsets because they believe unlocked handsets can result in a degraded customer experience. 

Speaking on a roundtable discussion at the Competitive Carriers Association conference here Thursday, Ron Smith, president and CEO of Bluegrass Cellular, said that if a customer brings an unlocked handset to an operator's network, they make not receive the best service because they won't have the differentiators that carriers build into the network.

Craven Shumaker, president and CEO of iWireless, agreed. "We have to ensure the customer experience is good and we need that control. Unlocked devices do not get the same quality of service. There is a tradeoff."

Nevertheless, some operators believe that you should unlock phones for customers if they decide to leave your service and go to another provider. Jim Hyde, CEO and president of nTelos, said that if a customer is not satisfied with their service and they want to change operators, phones should be unlocked. "If you forbid them from unlocking the device after they are with you, then you are talking out of both sides of your mouth. You can't charge them an ETF [early termination fee] and then say they can't unlock their phone when they leave. That's wrong."

Unlocked phones have been in the spotlight recently 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 FCC is also looking into the issue.

Competitive carriers, like many in the industry, are closely evaluating T-Mobile USA's recent decision to offer customers unsubsidized phones that they can pay for with an installment plan vs. offering a subsidized phone with a two-year contract. However, many believe that T-Mobile's plan is not necessarily a good idea for the industry. "The customer is still on the hook to pay for the phone," Hyde said. "But they are not on the hook to pay for your service."

Related Articles:
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White House throws support behind unlocking phones
FCC's Genachowski: We'll investigate ruling on unlocked phones
Petition against unlocked phones ruling will force White House response
T-Mobile, Ting respond to rules requiring carrier approval to unlock phones

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