The locks come off mobile devices, but not far enough

It took new Federal Communications Commission Chairman Tom Wheeler just a few weeks to persuade the major U.S. mobile phone companies to make it easier for customers to move their phones and tablet computers to a rival carrier’s network. But the new industry principles announced Thursday by CTIA, the wireless companies’ trade association, don’t give consumers all the rights they should have over the devices they buy.

At issue is consumers’ ability to “unlock” a phone or tablet from the network it is electronically bound to. Many (but not all) wireless devices are technically capable of operating on more than one carrier’s network, but carriers usually sell them with software that prevents them from straying to greener wireless pastures. And under the 1998 Digital Millennium Copyright Act, it’s illegal for anyone to make or sell technology to circumvent those software locks.

The new principles, which the five largest carriers have endorsed, call on carriers to unlock mobile devices or provide the information needed to unlock the devices after any applicable service contract or financing plan has been fulfilled. That would include the payment of any early termination fees. Devices that have no service contract, such as prepaid phones, can remain locked for up to a year, after which carriers will unlock them on request.

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The problem is that carriers will continue to act as gatekeepers unless they automatically unlock devices when the customer’s contract expires. That hurts the resale value of phones, and with it the phones’ value to the original buyer. The principles even allow carriers to charge an unlocking fee to new customers who want to use a phone they bought from a different carrier or on the resale market.

The right solution here is for Congress to make it legal to unlock devices, period. That would legalize unlocking technology, making it easier for consumers to do the job themselves instead of relying on a carrier’s indulgence. It also would restore full rights of ownership to those who buy phones and tablets from the wireless carriers.

Naturally, the wireless companies argue that carriers need the locks to recover the subsidies they put into phones and tablets. But carriers already have a perfectly good way to recover their subsidies -- contracts that require a customer who buys a device to remain a subscriber for a certain number of months, or else pay an onerous early termination fee. The software locks are overkill, at least when it comes to discouraging churn.

Besides, using copyright law to prevent phones from hopping from one network to another or being sold in bulk overseas hardly seems relevant to the statutory goal of protecting and incentivizing creative works. And at the urging of the U.S. Copyright Office, the Librarian of Congress had exempted cellphone unlocking from the DMCA’s ban for years, starting before Apple released the first iPhone. The agency reversed course in October 2012, however, reimposing the ban as of last January.

The decision was decried by the White House and multiple members of Congress, and the FCC began pressing the wireless companies early this year to adopt more lenient unlocking policies -- to no avail. Shortly after taking office in November, Wheeler (a former president of the CTIA) sent a letter to current CTIA President Steve Largent, telling him (in so many words) that if the industry didn’t act on the unlocking issue voluntarily, the commission would force it to. The principles released Thursday closely track what the FCC had sought.

Maybe Wheeler can now persuade lawmakers to take the next step and give consumers real ownership rights over the devices they buy from wireless companies.

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