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FCC Investigating U.S. Ban of Unlocking Cell Phones

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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