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FCC Investigating U.S. Ban of Unlocking Cell Phones

By - Source: TechCrunch | B 57 comments

There may be competition and innovation concerns regarding the new unlock ban on new smartphones.

Thursday night during an event in San Francisco, FCC chairman Julius Genachowski said that the commission will investigate a recent law passed by Washington that bans consumers from unlocking new smartphones acquired through mobile carriers. The law arrived on January 26, 2013 with a hefty $500,000 fine and up to 5 years in prison for anyone found liable.

Recently outraged consumers have taken to the Internet to sign a WeThePeople petition that successfully reached the 100,000 threshold required for a White House response. "When the White House weighs in on the cellphone unlocking petition it will then be incumbent on Congress to then address this problem," said Derek Khanna of Forbes who help spearhead the petition. "It’s unfortunate that it’s easier to get the President on the record than to get one Member of Congress on the record."

Genachowski said on Thursday night that the ban actually raises both competition and innovation concerns. Unfortunately, he's not sure if the FCC has any authority, but if there's any possible avenue the commission can take, they'll exert every ounce of influence to reverse the decision. "It’s something that we will [examine] at the FCC to see if we can and should enable consumers to use unlocked phones," he said.

In 1998, Congress passed the Digital Millennium Copyright Act (DMCA) to outlaw technologies that bypass copyright protections. It allows the Library of Congress to determine and issue exemptions for the law which for six years included cell phone unlocks. In October 2012 this particular class of technology was not renewed for exemption by the Library of Congress, and Congress itself "refused to act". This same ruling went into effect on January 26.

Now the White House must answer to the people. "Public Knowledge’s question on this issue for President Obama was one of the most popular for President Obama’s Google Plus Fireside Hangout," Forbes writes. "While it was not asked of President Obama at the time, he will now have an opportunity to address it."

As TechCrunch points out, the WeThePeople petition sitting on Obama's desk is a symbol representing customers fighting against corporate America – in this case wireless carriers – who thrive on lucrative contracts that literally chain customers for two years.

Unfortunately, subsidizing doesn't mean a smartphone is the property of a customer as soon as it's booted up for the first time. Subsidizing means customers are virtually "renting-to-own" and until the contract is fulfilled, it's the property of the carrier. The agreement is that customers can have a phone for little or no cost up front in return for sticking with a mobile service for two years (which pays off the remaining balance). Naturally that ball-and-chain scheme doesn't apply to "unlocked" phones purchased for the full price -- phones still retained after the two-year period should be free for unlocking as well.

That said, the new law is seemingly protecting wireless carriers from customers intent on hacking their property. There's a good chance this was the thought process flowing through the Library of Congress when it let the exemption lapse, and what the White House will likely say in response to the petition. Does the new ban hinder competition and innovation? Should carriers be allowed to ban smartphone unlocking? When does a smartphone actually become your property?

 

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  • 32 Hide
    Sakkura , March 2, 2013 3:16 PM
    Half a million dollars in fine and 5 years in jail for unlocking a smartphone. Yes, now I understand why America is the greatest country in the world. Sheesh...
  • 30 Hide
    itchyisvegeta , March 2, 2013 4:07 PM
    Something is wrong in this country, when you get in more trouble for unlocking a phone, than you would for committing a sex crime.
  • 28 Hide
    Soda-88 , March 2, 2013 3:30 PM
    Nice one, Anders Breivik got 21 years for murdering 77 people and US citizens who unlock their phone can get 1/4 of that. I think it's safe to say that I'm glad I don't live there.
Other Comments
  • 16 Hide
    spentshells , March 2, 2013 3:11 PM
    No joke this has to do with lobby groups. Nothing about this makes any sense.
    Someone is trying to retain customers by force (more or less)
  • 32 Hide
    Sakkura , March 2, 2013 3:16 PM
    Half a million dollars in fine and 5 years in jail for unlocking a smartphone. Yes, now I understand why America is the greatest country in the world. Sheesh...
  • 28 Hide
    Soda-88 , March 2, 2013 3:30 PM
    Nice one, Anders Breivik got 21 years for murdering 77 people and US citizens who unlock their phone can get 1/4 of that. I think it's safe to say that I'm glad I don't live there.
  • 15 Hide
    A Bad Day , March 2, 2013 3:48 PM
    SakkuraHalf a million dollars in fine and 5 years in jail for unlocking a smartphone. Yes, now I understand why America is the greatest country in the world. Sheesh...


    We can't even afford our own prisons. There's overcrowding in majority of them. Not too long ago, two busloads of prisoners were transported from all the way from Chicago to a local "correction facility" in my county.
  • 23 Hide
    Hellstalker , March 2, 2013 3:49 PM
    If this is so then carriers should be obliged to unlock your phone automatically when your contract is over, else the same penalty for every phone NOT unlocked.
  • 30 Hide
    itchyisvegeta , March 2, 2013 4:07 PM
    Something is wrong in this country, when you get in more trouble for unlocking a phone, than you would for committing a sex crime.
  • 25 Hide
    sykozis , March 2, 2013 4:12 PM
    Here's my issue. They claim the smartphone to be property of the carrier for the duration of the 2 year contract. In that case, shouldn't the carrier be 100% responsible for any issues the phone may have during that 2 year contract and not the phone's manufacturer? I previously had issue with a smartphone on Sprint.... Sprint wanted to charge me $30 to replace a phone still covered by it's manufacturer's 1yr warranty. If I was leasing the phone, as suggested in this article, it would have been Sprint's responsibility to ensure I had a properly functioning phone at all times (not to mention it's illegal to charge a customer to repair/replace a product covered by any type of warranty unless the agreed upon terms state such charges).... So, at what point does the consumer STOP getting ripped off? If we don't "own" the phones due to buying with subsidies, the carriers should be forced to warranty the phones themselves for the duration of the 2 year contract or terminate the contract at no charge if the phone fails outside of it's 1yr warranty.
  • 15 Hide
    jezus53 , March 2, 2013 4:13 PM
    SakkuraHalf a million dollars in fine and 5 years in jail for unlocking a smartphone. Yes, now I understand why America is the greatest country in the world. Sheesh...


    weird isn't it? the fine for speeding in my area, essentially risking peoples lives because you are in such a hurry, comes out to around 400 dollars. running a red light costs you 397 dollars (according to the signs at nearly every intersection here). but I'm glad we have such strict penalties for such terrible and heinous crimes like unlocking my own cell phone.
  • 13 Hide
    Avus , March 2, 2013 4:36 PM
    just wonder any other country has the similar law?
  • 22 Hide
    smeezekitty , March 2, 2013 4:41 PM
    $500000 + up to 5 years for unlocking a cell phone? Holy crap that is absurd!
    Its not like you robbed a bank or something.

    On a side note, the DMCA is one of largest pieces of crap created in recent history.
  • 18 Hide
    jalek , March 2, 2013 4:57 PM
    The FCC isn't the right agency, it should be the FBI, finding out which Congressmen got the money attached to this bill. It was likely authored by company lawyers, so these Congressmen were acting as agents rather than lawmakers. It's so commonplace now, they probably don't even consider it bribery.
  • 9 Hide
    bllue , March 2, 2013 5:00 PM
    This has Apple smeared all over it. I'm sure Apple is lobbying against unlocking phones
  • 8 Hide
    tobalaz , March 2, 2013 5:00 PM
    sykozisHere's my issue. They claim the smartphone to be property of the carrier for the duration of the 2 year contract. In that case, shouldn't the carrier be 100% responsible for any issues the phone may have during that 2 year contract and not the phone's manufacturer? I previously had issue with a smartphone on Sprint.... Sprint wanted to charge me $30 to replace a phone still covered by it's manufacturer's 1yr warranty. If I was leasing the phone, as suggested in this article, it would have been Sprint's responsibility to ensure I had a properly functioning phone at all times (not to mention it's illegal to charge a customer to repair/replace a product covered by any type of warranty unless the agreed upon terms state such charges).... So, at what point does the consumer STOP getting ripped off? If we don't "own" the phones due to buying with subsidies, the carriers should be forced to warranty the phones themselves for the duration of the 2 year contract or terminate the contract at no charge if the phone fails outside of it's 1yr warranty.


    Right there with ya on this one.

    I'd like to add any phone should be unlocked once the 2 year contract is up since we just finished paying for said phone, and any phone we pay for in full should remain unlocked and allowed to transfer to any carrier so long as the phone is capable of supporting the network of the carrier.
    We consumers are losing our rights because the people making decisions have no clue and are too busy getting their pockets lined with stacks of cash to care from these jackasses that are screwing us over.

  • 8 Hide
    cpatel1987 , March 2, 2013 5:12 PM
    tobalazRight there with ya on this one.I'd like to add any phone should be unlocked once the 2 year contract is up since we just finished paying for said phone, and any phone we pay for in full should remain unlocked and allowed to transfer to any carrier so long as the phone is capable of supporting the network of the carrier.We consumers are losing our rights because the people making decisions have no clue and are too busy getting their pockets lined with stacks of cash to care from these jackasses that are screwing us over.


    I'd go a step further and say your free to do what you want to the phone after the 1 year warranty is up...oh wait that was the rules of the land before :-).
  • 6 Hide
    icycool , March 2, 2013 5:16 PM
    The smartphone is essentially owned by the carriers for the duration contract period, as said.. you are renting-to-own.
    Having said that, if you fully intend to pay out the contract, you essentially own it for your own purposes.. ie unlocking.
    Just like a lease to own car, if you don't like the tyres, you change them with intention to fully own.
    And should you exit contract, you will be paying for carriers damage anyway.
    And still end up owning said product.
  • 14 Hide
    rgs80074 , March 2, 2013 5:35 PM
    yes i fully agree, these punishment is insane for unlocking a phone.

    you should be able to unlock your phone once your done with the contract, and i agree the company should extend the warranty to the term of the contract to cover the phone. you should be able to jailbreak your phone at anytime without voidnig the warranty.

    on top of this you pay less for the phone becasue the phone company is subsidizing the phone for the contract. i understand this but for some reason once your out of your contract and such your bill does not go down. so if your no longer paying to subsidize your phone why are we still paying the same for the phone service.

  • 7 Hide
    10tacle , March 2, 2013 5:45 PM
    SakkuraHalf a million dollars in fine and 5 years in jail for unlocking a smartphone. Yes, now I understand why America is the greatest country in the world. Sheesh...


    Yet people from all over the world want to move to America (legally AND illegally) because they are escaping worse circumstances in their own nations. But no nation on the planet is free from stupid laws, ignorant and corrupt politicians, and a bunch of idiots in the population that vote for the politicians that pass the stupid laws to begin with.
  • 8 Hide
    anathema_forever , March 2, 2013 5:47 PM
    I like the idea of punishment being proportionate and if its half a million for a consumer shouldn't be like half a billion for the carrier if they do something naughty like over bill someone etc? Half a million is alot of an individuals total wealth and the cost of the cellphone doesn't compare being like 700 max. Seems only fair the carriers pay out in the billions if they screw up a customers service somehow, its only fair and I thought ideas like that were important in the legal system. If I am right and there is some form of fairness to this and fairness really does belong in the law I want those senators etc heads surgically installed up their asses for permanent residency.
  • 6 Hide
    Sakkura , March 2, 2013 7:12 PM
    Quote:
    Yet people from all over the world want to move to America (legally AND illegally) because they are escaping worse circumstances in their own nations. But no nation on the planet is free from stupid laws, ignorant and corrupt politicians, and a bunch of idiots in the population that vote for the politicians that pass the stupid laws to begin with.

    Dunno, looks like more people are heading for (western/northern) Europe than the US. Though geography is probably a factor in that.
  • 11 Hide
    teh_chem , March 2, 2013 7:13 PM
    I hope this gets reversed. But...

    I also think that the current model of cell phone carriers is awful. You get a "subsidized" phone. OK. So if I have an "unsubsidized" phone, how come I don't get a discount on my monthly payments? That's where this whole model breaks down.

    Personally, I'd rather shell out a few hundred bucks for the phone of my choosing, and pay my carrier for honest-to-god usage. Not all this other crap.

    I hate that it operates on the Sprint network, but I really like using Ting as my provider. Sure, they're young and small, and their hardware options are small but growing. But you get exactly that. You buy a phone for full retail, and you get much more-reasonable prices for minutes/text/data. I still think the prices for cell service are inflated in general, but paying ~$25/mo for my cell phone is better than $80/mo for the exact same service..
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