When the White House began its online petitioning system We the People in September of 2011, they undoubtedly envisioned a wide array of questions and requests. With the floor open to so many, petitions have ranged from ludicrous to meaningful – multiple requests for comprehensive immigration reform – all for the public to see. A recent petition and response concerning cell phone unlocking were key players in an ongoing discussion on the LexBlog Network, and Congress may be next in line to respond as consumers try to figure out how much they own their mobile devices.
Cell phone unlocking is a relatively simple process. Unlike jailbreaking – which is still exempt from the Digital Millennium Copyright Act – unlocking is often as simple as downloading and installing a program on your phone. Doing so allows you to exert greater control over who you choose as a carrier, something especially appreciated by mobile phone owners travelling overseas who wish to avoid outrageous roaming charges. Most phones can be bought unlocked, but Mitchell Lazarus points out on Fletcher, Heald & Hildreth’s Comm Law Blog, the payoff is negligible:
“It is possible to buy an unlocked phone and take it to the carrier of your choice. But that has a downside: you will pay full price for the phone ($700, in my case) and probably pay the same monthly carrier rate as someone who bought the same phone at a steep discount. It is also possible to unlock the phone you already have, just by downloading and running software from the Internet. Not hard to do – but it might get you hauled up before a federal district judge.”
Why the sudden change? Technically, unlocking is illegal under the DMCA, however that part of the law was exempted twice in 2006 and 2010. Last October, Librarian of Congress James Billington, determined that the exemption was no longer necessary, effectively ending “do it yourself” cell phone unlocking as of January 26, 2013. Once again, Lazarus sheds some light on the story:
“How did the Librarian explain the sudden change? Unlocking a phone entails modifying its software. Until 2010, most people would agree that when you bought a phone, you also bought the software inside it, so the software was yours to modify. But a decision by the U.S. Court of Appeals for the Ninth Circuit that year suggested otherwise. As the Ninth Circuit saw it, the phone buyer acquires only a license to use the software, not ownership. The wireless phone industry, which opposes unlocking, used this case to argue that the carrier still controls the software after the sale. “
However, that wasn’t the only rationale the Librarian likely used in disallowing the unlocking exemption. Paul Madison explains on the Telecom Law Monitor, a Kelley Drye & Warren publication, that carriers stand only to lose if phones are allowed to be unlocked:
“Put another way, the logic is that since the carriers will unlock the phone upon request (and satisfaction of certain conditions), there is no reason an exemption (which by their nature are extraordinary) from copyright law. This notion was bolstered by the practice of some who apparently bought pre-paid phones that were subject to subsidized pricing, unlocked the phones, and sold them in foreign markets at non-discounted prices. On the losing end of this transaction was the carrier, who was unable to recover the subsidy because the phone was not used on its network. Removing the exemption makes this practice unlawful.”
As consumers are finding out now, they’re in a lose-lose situation. Buy a unlocked phone at a premium and your gains are minimal, or unlock your phone without the carrier’s consent and you face fines and prison time. If you were lucky enough to buy your phone before January 26th, that device can still be unlocked, but new mobile phone owners aren’t so lucky. The safest and most cost-effective route, buying a locked phone, comes with its own previously mentioned drawbacks. Bruce Raymond discussed the implications for international travelers more thoroughly on his Boston Business Litigation Blog:
“The practical implication of this act is that individuals who travel abroad on business will be forced to pay expensive roaming fees in order to activate their cell phones instead of simply unlocking their phones for use on a local carrier network. Essentially, if you are abroad and you want to make a phone call, this act makes it impossible to do so cheaply, as the roaming fees will rack up substantially.”
While removing the unlocking exemption may prove to be a boon for carriers, consumers are letting their feelings be known. In a We the People petition to the White House, over 114,000 people asked that the administration request the decision be rescinded, or “failing that, champion a bill that makes unlocking permanently legal.”
In a response, R. David Edelman, the White House Senior Advisor for Internet, Innovation, & Privacy, strongly advocated for a legislative fix for consumers looking to legally unlock their own phones:
“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.”
The response also mentioned FCC chairman Julius Genachowski, who, as Nickolas Milonas reported on K&L Gates’s TMT Law Watch, is deeply concerned about the broader implications of the Librarian’s decision:
“FCC Chairman Genachowski echoed the White House’s response, stating that the ban “raises serious competition and innovation concerns.” As the Copyright Office is within the Library of Congress, an agency of the legislative branch, the White House and the FCC Chairman agreed to work together with Congress to develop “legislative fixes,” clarifying that copyright law does not prevent consumers from switching carriers when they are no longer bound by a service agreement. The Copyright Office subsequently responded to the criticism, stating that the unlocking ban “would benefit from review” by Congress and was not meant to foreclose broader public policy discussions on the issue.”
Unfortunately for consumers, these petitions rarely come up with concrete solutions to problems requiring legislation. The White House obviously can’t create legislation, and with the sequestration, immigration reform, and gun control laws all on the negotiating table, it’s seriously unlikely that the administration will expend any political capital to change the current laws. While other fixes could come from the FCC or National Telecommunications and Information Administration (NTIA), Covington & Burling attorney Sarah Tremont apparently isn’t sold on the effectiveness of that route either. On Inside Tech Media, Tremont wrote:
“Despite its support for the legalization of some cell phone unlocking, it is unclear whether the Obama administration can unilaterally effect this change. The petition response advocated for “narrow legislative fixes in the telecommunications space” and consideration of the issue by mobile providers. The White House also encouraged action by the FCC and stated that the President’s chief advisory agency for telecommunications and Internet policy, the Department of Commerce’s National Telecommunications and Information Administration (NTIA), will be formally engaging with the FCC in this space. Whether these efforts will yield results remains to be seen, especially considering that NTIA’s recommendation to preserve the DMCA’s cell phone unlocking exemption went unheeded during last year’s rulemaking.”
How Congress will respond remains to be seen, but it stands to reason that without quickly creating legislation, mobile phone consumers will be stuck with this new policy for quite a while.
To read more analysis on cell phone unlocking check out our dedicated section here, and if you’re interested in more DMCA news/updates, we have that too.
Photo Credit: LiuTao, Flickr