Cell phone unlocking gains ally in Obama

March 5, 2013: 1:25 PM ET
Cell Lock-Up
The White House now supports unlocking cell phones in certain circumstances.
NEW YORK (CNNMoney)

An online petition demanding that cell phone customers be able to freely unlock their phones from carrier's shackles, gained an unexpected ally this week: The Obama administration.

The petition, which was posted on the White House's website, gained 114,000 signatures in support. On Monday, it received a response from R. David Edelman, the Obama administration's senior adviser for Internet, innovation and privacy.

Edelman partially agreed with the petition's argument. He said that any mobile device that is locked to a particularly wireless provider, such as Verizon (VZ), AT&T (T), Sprint (S) or T-Mobile, should be unlockable once a user's contract is up.

"The Obama administration would support a range of approaches to addressing this issue, including narrow legislative fixes in the telecommunications space that make it clear: neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation," Edelman wrote.

In January, the Library of Congress removed an exemption from the 14-year-old Digital Millenium Copyrights Act, which protected consumers who sought to unlock their cellphones. Doing so now falls under the risk of punishment of up to five years in prison and a fine of $500,000 -- even if a subsidized smartphone or tablet is no longer under contract with any particular carrier.

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Though no one has yet been convicted of such an act, the penalties strike many as overly harsh.

One of the law's most outspoken critics is Sina Khanifar, the petition's author. Khanifar, one of the first to commercialize unlocking solutions in the early 2000s, argues for a more radical policy of allowing phones to be unlockable at any point. He says that any potential financial loss carriers may face from consumers unlocking their phones is protected by hefty early termination fees -- typically $350 penalties imposed on customers for breaking their contracts -- which make up most of the cost of the smartphone subsidies offered by carriers.

When asked whether or not the White House's support was sufficient in his view, Khanifar replied that he'll be releasing a website late Tuesday night with his comments on the matter.

On its surface, unlocking cell phones and tablets would seem like an obvious consumer right -- and a bizarre space for the Library of Congress to be making decisions on.

Yet some argue the ruling has a reasonable defense: If unlocking is legal, it will become easier for criminals to activate stolen phones on other networks, opening up a new channel for crime, says Michael Altschul, general counsel for wireless lobby group CTIA. Altschul noted in a recent blog post that if consumers want an unlocked phone, they can freely purchase one for the full price of the device. For those customers who want a contract and a subsidized phone, carriers today have policies in which they'll unlock consumers' devices.

That line of reasoning isn't good enough for Julius Genachowski, chairman of the Federal Communications Commission.

"From a communications policy perspective, this raises serious competition and innovation concerns, and for wireless consumers, it doesn't pass the common sense test," Genachowski said in a statement.

Hazy concerns about a dystopian future aside, there are good reasons why consumers might want to unlock their phones: If a person wants to switch to a carrier that provides a better value, but that customer cannot afford to buy a new device, phone or tablet unlocking is a solution.

International travel is another potential situation when unlocking could come in handy. Many carriers charge expensive roaming fees to their customers who travel abroad. With an unlocked phone, consumers could purchase cheaper service from a local carrier.

It's not yet clear how the Obama administration's push towards phone unlocking will play out. But as smartphones and tablets continue to become a necessity, the White House appears to be taking steps to ensure consumers have the right to fair and affordable access to these mobile devices.


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