November 29, 2013

FCC wants your cellphone ‘unlocked’

Carriers set up phones so they only work on their system, but that makes it difficult for consumers to switch service.

The Kansas City Star

Uncle Sam wants to hand you the keys to your cellphone.

A federal agency is pressing wireless phone companies to start “unlocking” customers’ phones, possibly by the time you exchange gifts for the holidays.

A locked phone will work only on the network of the carrier that sold the phone. The change would make it easier for consumers to shop for service from other carriers.

“It’s one less obstacle for the consumer to face in deciding whether to move to another carrier,” said Jeff Silva, an analyst at Medley Global Advisors. “At the end of the day, that’s what it’s all about.”

There are other moves to make your mobile phone more mobile. A federal judge in Kansas recently asserted a subscriber’s right to sell a phone – including that new, upgraded one fresh out of the box.

Even some of the technology differences that make it hard to switch carriers without switching phones are eroding.

Wireless carriers say locking phones allows them to offer expensive new devices at discounted prices that customers can afford. And those devices are tuned specifically to the carrier’s network, which means they won’t work well on other networks.

“While the promise of universal compatibility by unlocking a device is enticing, we’re not quite there yet, and may never be,” said Bill Moore, whose company, RootMetrics, tests carriers’ networks for reliability and performance.

If vast numbers of cellphones are unlocked, the U.S. wireless industry may have to adjust its standard business model.

Though consumers can buy an unlocked phone for the full price of $650, most sign up for two-year service deals and get a discounted phone from the carrier.

Cellphone companies charge us $100 or $200, but we pay the rest back as part of our monthly bills, or as an early termination fee if we don’t keep up.

To cement the deal, wireless carriers lock the phone so it only works on their network.

T-Mobile is one carrier focusing on a different model. It sells phones on an installment plan separate from the service. Consumers still pay for their phones through the carrier, and if they cancel the service, they owe the balance due on the phone.

Because the cost of the phone is no longer part of the monthly bill, consumers can see more easily how much they’re paying for service.

Unlocking all phones would reinforce that focus. Carriers could compete harder on prices or continue to emphasize faster networks, better coverage and even brand cachet.

The U.S. market would move closer to the cellphone deal that prevails in Europe.

There, customers select and buy a phone first, often saving up to pay the full price, though discounted phones are available with service plans.

Mostly, Europeans stick with one phone longer but change carriers more often. Switching carriers is a relatively easy matter of buying a subscriber identity module card, or SIM card, from the new carrier and plugging it into the phone.

U.S. travelers with the right unlocked phone can move across Europe by swapping SIM cards along the way.

Holiday shoppers might keep the move to unlocking phones in mind as they check out the deals and devices available during the U.S. wireless industry’s busiest season.

The hurried push to unlock cellphones comes from the Federal Communications Commission. For eight months it has negotiated with the industry’s standard-bearer, CTIA-The Wireless Association.

“Enough time has passed, and it’s now time for the industry to act voluntarily or for the FCC to regulate,” the commission’s new chairman, Tom Wheeler, said in a letter last week to CTIA’s president, a post Wheeler once held.

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