White House Support for Unlocked Phones May Dial Up Pressure on Congress

The White House agreed Monday with consumers who want to be able to legally unlock their mobile phones and tablets and move them to the carrier of their choice.

The Obama administration’s statement was in response to a petition on the White House’s We The People forum that disagreed with the Library of Congress’ decision last fall to make unlocking mobile devices illegal. The petition received more than 114,000 signatures since the policy went into effect in January.

The White House believes that reversing the ban on unlocking would help ensure a competitive mobile device market and consumer choice, said R. David Edelman, a senior advisor to the administration for Internet, innovation and privacy.

Other consumer protection advocates that oppose the Library’s decision have argued that letting consumers unlock cellphones can cut down on electronic waste and lead to innovation within the industry.

Federal Communications Commission Chairman Julius Genachowski also voiced his support for legal, unlocked devices, saying it would secure competition and market innovation. He said Monday he encouraged Congress to examine the policy.

The wireless trade organization CTIA, on the other hand, argued that many carriers already have policies that allow for unlocking in many instances, and that third party providers have plenty of affordable unlocked phones for sale. The CTIA identified nearly 200 unlocked devices currently on the market in a Monday blog post responding to the White House decision.

The organization also noted that since consumers buy smartphones at a subsidized cost when they sign a contract with a carrier, their overall costs are often lower.

Can Change Happen?

Edelman said that the Obama administration would support a “range of approaches” to reversing the decision, including legislative fixes.

That option could mean the reinstatement of an exemption in the Digital Millennium Copyright Act (DCMA), which originally gave users the right to legally unlock a device in order to switch to a different provider.

The Library of Congress reviewed and upheld that exemption in 2006 and 2010 before changing its position in October. At that time, the Librarian argued that the mobile market had grown enough to ensure consumers had enough choice when picking new phones, networks and carrier plans.

It’s unclear at this point whether Congress and lobbyists for network providers, consumer interest groups and device manufacturers can orchestrate a change to the DCMA, said Scott Seder, an attorney with Roberts McGivney Zagotta LLC.

Whatever happens from a legislative standpoint, however, the current administration was wise to take its stance on the side of consumers, which could increase the pressure on Congress to reverse the Library’s decision, he said.

“The announcement signals that carriers can’t be, or even appear to be, heavy-handed with consumers,” Seder told the E-Commerce Times. “In terms of retail politics and public policy, it is a smart move for the White House to stand with consumers and to get out ahead of potential consumer complaints related to any enforcement of the Library of Congress decision.”

No Big Changes

While some opponents have overturning the ban on unlocked phones will lead to higher device prices, those increased costs are likely to be spread out in the overall cost of owning a mobile device, said Rich Santalesa, attorney at the InfoLawGroup.

“I think in certain circumstances it could lead to higher costs, not necessarily higher prices, for individual consumers switching carriers,” he told the E-Commerce Times. “To some extent, however, I think this concern is ameliorated by the upgrade patterns and carrier switch timing most consumers follow when switching carriers.”

Even without a legal ruling, though, carriers can work to ensure consumers that they have their interests in mind. Some of the industry groups in favor of making unlocking illegal have argued in the past that the ruling isn’t meant to send average users to jail for wanting to bring their phone to another carrier; the ban is meant to crack down on people selling illegally obtained unlocked devices on a much larger scale.

In that sense, carriers have an opportunity to write policies that promise not to punish customers for taking an unlocked device to another carrier, said Seder.

“It’s possible we’re not going to see any change here at all, and carriers can really make that the case by saying, ‘If you have no further obligation to us, we’re not going to jam you up, and if you’ve honored and ended your contract and can find better service somewhere else we’re not going to charge you to move,'” he pointed out. “Most people can’t imagine buying a television, even at a discounted rate to start service with a cable provider, with similar restrictions. To its credit, the White House picked up on that sentiment and made its move yesterday.”