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Consumers Union asks FCC to forbid handset locking

WASHINGTON-Consumers Union on Tuesday asked the Federal Communications Commission to seek ways to stop the industry practice of handset locking, saying doing so would lead to better coverage, more competition and less pollution.

“The only reason wireless companies install these locks is to try and hang onto their customers by effectively holding their phone hostage. While the locks take different forms with different technologies, they all have the same effect-putting together another roadblock to competition in the wireless market,” said Chris Murray, Consumers Union legislative counsel. “When locking is prohibited, we can expect to see phones that are compatible on all networks, which ultimately will lead to better coverage, better 911 service, more competition and less toxic pollution.”

U.S. cellular carriers were given a pass by the FCC and the Department of Justice to bundle phones and service together during the infancy of cellular. The practice continued with PCS. Carriers subsidize the costs of handsets, but some require customers to pay full price if they wish to upgrade or replace a lost or stolen phone while they are on contract without renewing the contract.

Some GSM handset manufacturers are beginning to sell phones through alternative distribution channels, such as the Internet. Virtually no manufacturer sells CDMA phones outside of a CDMA carrier’s purview. The reason is that CDMA phones don’t have Subscriber Identity Module cards like most GSM phones. GSM subscribers can easily move their SIM cards from one GSM phone to another, thus allowing phone manufacturers to sell GSM phones without carrier approval. CDMA phones on the other hand must be individually programmed to work on specific CDMA networks, a task beyond only the most tech-savvy phone technician. However, GSM carriers are able to “lock” their phones, ensuring that the device will work only on their networks and not the networks of rival GSM carriers. Subscribers can move their SIM cards from one locked phone to another as long as all those devices work over the same carrier network.

The wireless industry believes that locking handsets protects their investment, and that it is a consumer benefit to get a new phone when changing carriers.

“Just as carriers offer various pricing plans and a variety of service offerings, different carriers have different policies on unlocking phones. For consumers who feel this is an important issue, the competitive wireless marketplace already offers a range of choices among the carriers. But, for many consumers, getting a new handset with better features is one of the advantages of changing carriers,” said Travis Larson, spokesman for the Cellular Telecommunications & Internet Association. “The United States provides the least expensive handsets to our consumers worldwide. Phones are locked so that they are not re-sold in other countries for a profit and so that carriers who provide handset subsidies are able to recover their investments over the life of the contract.”

RCR Wireless News Reporter Mike Dano contributed to this report.


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