Because mobile device unlocking policies vary significantly from carrier-to-carrier, the FCC this month moved to put forth a uniform 60-day unlocking requirement designed to make it easier for consumers to change providers.
Impact: In a unanimous 5-0 decision, the FCC approved a Notice of Proposed Rulemaking that calls for mobile carriers to unlock mobile devices 60 days after activation with a carrier. The FCC did leave in an exception if it’s determined within the 60-day period that the handset was bought fraudulently. Currently when customers purchase a new mobile device, it’s generally locked to the carrier from whom they made the purchase for a specific amount of time based on the terms of that carriers’ mobile contract. The approval initiates a public comment period that could culminate in making the 60-day requirement official provided the FCC doesn’t make any changes based on the feedback it receives.
Existing unlocking policies can be confusing for customers because they vary so widely across carriers and serve as barriers for customers looking to change their mobile carrier. Depending on the carrier, unlocking policies can be dictated by conditions imposed on the acquisition of spectrum licenses or mergers, when customers meet their carriers’ payment requirements, when customers request their phone be unlocked, or whether they have postpaid or prepaid service. Phones can be unlocked automatically, such as when a customer has paid in full, but some carriers require consumers to make an unlocking request before they’ll unlock a device, with some requiring the request be made at a brick-and-mortar retail location. The postpaid vs. prepaid policies differs a little, with some carriers employing a 60-day or fewer unlocking criterion for postpaid service but impose a longer window on pre-paid customers.
Verizon, for instance, has to automatically unlock handsets after 60 days as a condition for its purchase of both 700 MHz spectrum and its TracFone acquisition. That differs significantly from the conditions imposed on T-Mobile following its acquisition of Sprint, in which it’s required to unlock prepaid phones within a year of activation. T-Mobile went ahead and matched that unlocking period on its Metro by T-Mobile prepaid brand, increasing the Metro unlocking policy from six months to a full year. And under the terms of the Minto Mobile acquisition, T-Mobile must unlock all Mint Mobile and Ultra Mobile devices activated on the T-Mobile network both before and after the transaction’s closing within 60 days. But those policies all focus on prepaid customers. For postpaid subscribers, T-Mobile has a much more lenient 40-day unlocking policy, on the condition that customers have paid for their device in full. Although AT&T isn’t subject to any specific unlocking requirements imposed by federal regulators, it has different rules around unlocking than both of its rivals. The company requires customers to submit a request to unlock a phone that has met the 60-day benchmark. But that phone also has to be fully paid off.
In the face of such a chaotic landscape, it’s no wonder the FCC started advocating for a nationwide, uniform standard that fosters transparency, consumer choice, and competition, all of which it believes will better service the consumer interest. As FCC Chairwoman Jessica Rosenworcel stated about mobile customers, “You bought your phone, you should be able to take it to any provider you want.” The FCC proposal drew approval from NTIA, which emphasized how it would increase competition in the wireless market, and from consumer group Public Knowledge, which highlighted the potential positive effects unlocking will have on low-income consumers’ ability to switch to cheaper plans, as well as increasing the number of used phones available on the secondary market.
However, the devil is in the details. For example, the FCC laid out questions around whether phones still under an extended payment plan when reaching the 60 day mark should be unlocked and whether the timing itself should be shorter or longer than 60 days and under what conditions. A more provocative question is whether locking phones for any length of time is necessary to protect carriers from handset fraud. The potential effects of the 60-day rule on deep discounts for devices and extended payment plans appear to be a concern, especially how it would impact contracts elected to lock in monthly rates.
