Sunday marks new era in cellphone carrier market power

HTC New cellphones purchased after this Saturday Jan. 25, 2013 can be unlocked only with the permission of the carrier; phones purchased before Sunday are exempt from this restriction and have been since 2006.

Back in October, the U.S. Copyright Office filed a new decision on unlocked phones in the Federal Register. The Copyright Office is the branch of the federal government that makes decisions about what can be exempt from provisions of the Digital Millennium Copyright Act (DMCA). In 2006 and 2010 it decided we had the right to unlock our phones. Period.

What does the 2012 ruling say?

If you “own” a cellphone right now, you have the right to unlock it.

If you “buy” a cellphone after January 26, you can unlock it only if you get approval from your carrier. Legal speak coming up (emphasis added):

[This ruling] permits the circumvention of computer programs on mobile phones to enable such mobile phones to connect to alternative networks (often referred to as “unlocking”), but with limited applicability. In order to align the exemption to current market realities, it applies only to mobile phones acquired prior to the effective date of the exemption [Oct 26, 2012] or within 90 days thereafter.

If you are feeling paranoid, call your carrier right now and ask that your phone be unlocked. Or pay a service to do it for you; if your carrier will not unlock your “legacy” phone, you still have the right to legally unlock the phone.

But there are some other issues

I have quite a bit of heartburn with this ruling.

First, even though the Copyright Office rulings to date have favored citizens over telcos, AT&T has been a notable laggard with regards to the iPhone. From April 2012:

In a statement to Phone Scoop, AT&T said that it will [finally] offer customers the option to unlock their iPhone so long as they’re not currently under contract and have an account that’s in good standing.

The fact that AT&T (or Verizon) could have any legal standing NOT to unlock a phone after a two-year contract has expired is troubling. (Class action suit, anyone?) Especially given this argument made by the CTIA (“The Wireless Association”) for keeping the phone locked:

CTIA explained that the practice of locking cell phones is an essential part of the wireless industry’s predominant business model, which involves subsidizing the cost of wireless handsets in exchange for a commitment from the customer that the phone will be used on that carrier’s service so that the subsidy can eventually be recouped by the carrier.

Second, the decision references a 2010 court ruling that we don’t own software, we only license it. As such, we can’t resell it. Or unlock it:

In 2010, the Ninth Circuit issued its decision in Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010), holding that “a software user is a licensee rather than an owner of a copy where the copyright owner (1) Specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.”

Hence my use of quotation marks above on the words “own” and “buy.”

Third, the Copyright Office says that carriers are selling unlocked phones these days — there are “ample alternatives” and “a wide array of unlocked phone options available to consumers.”

Really? In the U.S., the majority of cellphones sold by the big carriers are locked. We do not have perfect substitutability – an unlocked Blackberry is not a substitute for a locked iPhone.

And the fact that some carriers will not unlock your phone even after your contract has been fulfilled shows that the industry — or at least AT&T — is not operating in good faith. According to MacRumors, the iPhone5 at Verizon is already unlocked. But even that – iPhone on AT&T versus iPhone on Verizon – is not comparing two perfectly substitutable goods.

Yeah, I know – perfectly competitive markets are a theoretical construct. They don’t exist in reality. That’s why we have public policy – to compensate for market imperfections. (This market is also a oligopoly, further reducing the power of consumer and limiting competition. More reasons for aggressive – not corporate-centric – public policy.)

I also know that fixing the DMCA and mobile market in the U.S. isn’t the job of the Copyright Office.

It’s the job of Congress.

There is a petition

There is a petition (of course there is) on the White House site that is reasonable in language and scope. Have a look: it still needs a lot of signatures but raising awareness could help it hit 100,000.

I’d sign it if it included a requirement that telcos unlock a phone automatically once the contract had been fulfilled. Auto-matically. But it doesn’t. Remember, I just said it was reasonable, not radical.

So there you have it: it’s legal to unlock the phone you own now. After January 26, it will be legal only if your carrier says it is.

And because it is a DMCA violation, unlocking a phone purchased after January 26, 2013 would be a criminal act.

And that’s bad public policy.

NOTE: Unlocking and jailbreaking are not the same thing. An unlocked phone can be used on a network other than the original carrier. Jailbreak your iPhone if you want to install third party apps.

 

Post first appeared at WiredPen.
Photo credit: Flickr CC license (commercial/attribution) 

Kathy Gill (@kegill)has 20 years experience in digital media—both development and instruction. Since 2003, she has taught at the University of Washington and currently manages the website for King County Elections. A political junkie, her consulting work includes four years writing about U.S. politics for about.com, one of the top 10 visited Web content sites on the Internet, and she has worked with Boeing, AT&T Wireless, SAFECO, and Microsoft on intranet projects.

  • FAUXHAWK70

    Do yourself a favor and get the Google Nexus 4 which comes unlocked for $299 (8GB) and $349 (16GB) respectively! You can use it on any gsm network and never have to worry!

  • Bob

    I’m confused, is unlocking a phone transferring or making changes to the code or just deleting it?