Because of last week's landmark decision by the Copyright Office that "unlocking" phones is not illegal, prepaid phone service providers warn that prices will inevitably go up. Prepaid companies say the recent ruling weakens their attempts to sue cell phone hawkers who strip the phones of software and sell them for mark-ups of 100 percent or more in South America and Hong Kong. Prepaid customers typically spend $15 for a handset, while the companies reportedly spend $60 to $80 for the handsets, and make back the investment when the users buy airtime. One prepaid phone provider, TracFone claims that some 800,000 of its phones have been scooped up and resold on the blackmarket, resulting in losses of tens of millions of dollars.
For more on the effect of the unlocking law:
- see this article from USA Today