FCC, carriers reportedly near deal on cell phone unlocking

The FCC and wireless carriers are reportedly close to an agreement that would streamline the process for customers who want to unlock their cell phones, just a few weeks after FCC Chairman Tom Wheeler said the CTIA and the wireless industry should act by year-end or expect the FCC to issue regulations on the issue.

According to Reuters, which cited unnamed industry sources, the agreement is expected soon and would make carriers notify customers about the eligibility of their phones for unlocking, and could also cover some prepaid phones. Additionally, the deal would require carriers to process or deny unlocking requests within two business days, according to the FCC's earlier guidance.

The new deal would allow consumers to get their phones unlocked at the end of their contracts and make the process more uniform across carriers, the report said. According to Reuters, the final points of contention the carriers and the FCC are hammering out include questions on how soon the new policy would be adopted, how prepaid phones would be dealt with and how to keep unlocked phones off of black markets.

Last month Wheeler, a former CTIA chief himself, pushed the CTIA to amend its policies so that carriers would be more proactive in allowing consumers to unlock their phones. Starting this summer the carriers introduced handset upgrade policies that let consumers pay off no-contract devices in installments. Some carrier executives, notably AT&T (NYSE:T) CEO Randall Stephenson, have said that carriers need to move away from the model of subsidizing devices in exchange for customers accepting contracts. That could take some of the steam out of the need for unlocking, but for now it remains a front-burner issue that is likely to get resolved soon.

It should be noted that an unlocked phone is not necessarily an interoperable phone. For instance, phones that work on AT&T Mobility's (NYSE:T) network are unlikely to work on Sprint's (NYSE:S) network since the two carriers use different technologies and spectrum bands.

In a letter last month to CTIA President Steve Largent, Wheeler wrote that any unlocking policy must "provide a clear, concise, and readily accessible policy on unlocking," and should unlock mobile wireless devices "for customers, former customers, and legitimate owners when the applicable service contract, installment plan, or early termination fee has been fulfilled." Further, he wrote, carriers should "affirmatively notify customers when their devices are eligible for unlocking and/or automatically unlock devices when eligible, without an additional fee." Wheeler also wrote that carriers "process unlocking requests or provide an explanation of denial within two business days," and that carriers unlock devices for military personnel upon deployment.

"It appears that CTIA and the FCC are in agreement on all but the third item regarding consumer notification," Wheeler wrote. "Absent the consumer's right to be informed about unlocking eligibility, any voluntary program would be a hollow shell."

The hubbub over unlocking intensified in March after the Obama administration said it supports consumers who want to unlock their mobile phones without fear of breaking the law. The administration urged legislative fixes to remedy a recent government ruling on the topic that removed protections for people who do unlock their phones. The White House's statement was prompted by a petition on the issue that received more than 114,00 signatures.

The ruling on unlocking, from the Library of Congress, concerns the Digital Millennium Copyright Act, and was issued in October 2012. In effect, the Library of Congress, which governs copyright law, said that there is no copyright exemption for unlocking cellphones, making unauthorized unlocking potentially illegal.

For more:
- see this Reuters article

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