FCC Expected to Seek Comment on Handset Unlocking Rules

Public interest, consumer groups and two providers called on the FCC Tuesday to launch a proceeding that examines “uniform, industrywide” handset unlocking requirements. Industry officials said they expect Chairwoman Jessica Rosenworcel to circulate a notice this week examining the issue for a vote at the July 18 commission meeting. The Open Technology Institute at New America, Consumer Reports, Public Knowledge and the Benton Institute for Broadband & Society, as well as Verizon and EchoStar, parent of Dish Wireless, signed the joint letter.

“This will be the most important boost to competition in the wireless space since number portability,” predicted Benton Senior Counselor Andrew Schwartzman. “Millions of often unsuspecting consumers have been impeded from changing providers because of the artificial barrier imposed by locked handsets.”

The FCC should consider “the merits and trade-offs of handset unlocking requirements,” a Verizon spokesperson emailed. “The goal should be reaching an industrywide solution to this issue rather than continue with an increasingly fragmented and unbalanced approach to regulation."

But a former senior FCC official warned that a new mandate could have “the unintended consequence” of harming low-income consumers who rely on installment plans or subsidized devices. Some offerings could get pulled from the market if the FCC isn’t careful, the official said.

Verizon is the only major carrier that must unlock smartphones within 60 days. The FCC imposed handset unlocking and other open platform requirements on carriers buying licenses in the 700 MHz upper C-block auction in 2008 -- licenses that Verizon purchased (see 0803250101).

“Each of our companies and groups filed earlier this year in response to proposed handset unlocking conditions in the context of T-Mobile’s acquisition of Mint Mobile and Ultra Mobile,” the letter said: “Although the Commission ultimately imposed a 60-day unlocking condition on T-Mobile -- albeit one limited to the customers acquired from Mint and Ultra -- this outcome further fragments the consumer protections related to handset locking.” The FCC approved the buy in April (see 2404250047).

The “upshot” is that while Verizon customers have an automatic 60-day unlocking period, “all other mobile consumers (with the recent exception of Mint and Ultra prepaid customers) have locking periods that range in duration,” the letter argues: That situation “is poised to become even more uncertain, contested and inconsistent as greater consolidation is being proposed” including T-Mobile’s proposed acquisition of USCellular’s customer base and retail operations.

“Consumers find it very difficult to switch their smartphones from one mobile carrier to another, which reduces competition and keeps prices higher than they should be,” said Michael Calabrese, director of the Wireless Future Program at New America.

Cooley’s Robert McDowell recalled casting his first dissent as an FCC commissioner, in 2007, objecting to the device and application portability conditions placed on the C-block in the 700 MHz auction order. “Over time, through competition, the market has resolved this issue,” he said.

The letter called the issue “especially ripe for Commission action” as regulators worldwide “are adopting industrywide rules to make it easier for consumers to move from one provider to another.” The U.K.’s Office of Communications has required that wireless phones be sold unlocked since 2021; Canadian regulators imposed an unlocking requirement in 2017, the filing said.