It feels like this issue should have been resolved by now, but unfortunately, 17 years after the original iPhone was released, carrier device locking is still debated.
T-Mobile and AT&T this week responded to a proposed FCC rule that would require providers to unlock phones within 60 days of activation, even if they are under contract and unpaid.
In their responses, carriers said that unlocking phones immediately is a good thing for consumers because locking a phone to a specific carrier allows them to offer cheaper handsets to consumers. It claims to be harmful. Advocacy groups say the new policy will give users more choice and lower costs.
The FCC specifically called on T-Mobile to lock prepaid devices sold under the Metro brand to its network for one year after purchase.
Carriers claim that’s a good thing. “T-Mobile, for example, estimates that prepaid customers will see subsidy reductions of 40 percent to 70 percent on both low-end and high-end devices,” the carrier said in a published comment on the FCC notice. stated in response to the request. Proposed rulemaking. “Mobile phone unlocking mandates will leave providers with little choice but to limit the number of phones they offer, lower costs, and offer lower-performing phones.”
The FCC has considered how the proposed rule would affect subsidies and still believes device locks are harmful, especially for prepaid customers. from ars technica:
The FCC notes that “providers may rely on cell phone locks to maintain the ability to provide cell phone subsidies, and such subsidies may be particularly important in the prepaid environment.” Verizon’s claim was accepted. However, the FCC noted that the public interest group said, “Locked cell phones tied to prepaid plans may not be available to low-income customers because they may not have the resources to switch service providers or purchase new handsets.” It is argued that this has the potential to cause the most harm.”
Interestingly, Verizon is not as strongly opposed to this new rule as it unlocks devices 60 days after purchase due to the requirements imposed after purchasing new spectrum. There will likely be some benefits for Verizon, as customers on other networks will be able to easily switch to Verizon’s network. Even if you take out a cell phone loan and repay it in full, carriers often impose a waiting period before unlocking your device.
“You bought a cell phone, so you should be able to take it to the provider of your choice,” FCC Chairwoman Jessica Rosenworcel said when the FCC proposed the rule. “Some providers already operate this way. Others don’t. In fact, some have recently increased wait times for customers to be able to unlock their devices 100% of the time. .”
If you remember, people were stunned when the original iPhone was released in 2007 with a starting price of $499. To boost sales, major carriers such as Verizon and AT&T began subsidizing phone bills, allowing customers to pay a low upfront price and cover the rest in monthly installments, typically over two years.
Although simple enough to understand, this business model has over the years caused a lot of confusion and embarrassment to customers who constantly feel trapped or cheated into the deals they have agreed to. I know. My parents learned that the iPhone they bought a year ago wasn’t actually “free” and they would have to pay a lot of money to buy the phone if they wanted to switch to a different carrier to get cheaper service. I still don’t understand that there is.
Additionally, carriers like Verizon often require customers who take advantage of one of these “free” device offers to subscribe to a high-end monthly service plan. If you look at Verizon’s website right now, the carrier declares that “you can buy the iPhone 15 Pro Max,” but notes in the fine print that you must select the Unlimited Ultimate plan to sign up. . The situation is similar at AT&T. The device is financed at 0% interest for 36 months, which sounds great, but you have to choose a pricing service plan, and again, your carrier won’t charge you even after you’ve made your payment. I want to keep my device locked. The FCC is instead proposing stricter unlocking requirements to eliminate some of this friction.
Locking the financed device to the network until the payment is completed probably makes sense in that it doesn’t allow the customer to take the phone elsewhere and skip the payment. Perhaps car dealers will include GPS trackers in devices purchased on loan. You can drive to Mexico and stop making payments, but it won’t be good for your credit or your ability to get another car loan in the future. The same applies to phones. With AT&T or T-Mobile, you are left with no other options. It appears that the device lock is not there to prevent loan write-offs.
Perhaps device financing should be separated from service costs so that consumers better understand the actual price they are paying and are not forced into premium plans for financing. Many consumers don’t understand how much they’re actually paying, and we need a better solution than the current system, where phones are far from “free.” Locking devices only adds friction, forcing consumers to continue paying more for services than they actually need, but it prevents carriers from moving customers elsewhere. In that sense, it makes sense.
