CAGW Submits Comments to FCC on Cell Phone Unlocking
Agency Comments
November 12, 2024
Marlene H. Dortch Secretary Federal Communications Commission 45 L Street, N.E. Washington, D.C. 20554
RE: Ex Parté Submission – WT Docket No. 24-186
Dear Ms. Dortch,
Citizens Against Government Waste (CAGW) is a private, nonprofit, nonpartisan organization dedicated to educating the American public about waste, mismanagement, and inefficiency in government. On behalf of the more than one million members and supports of CAGW, I am submitting this ex parté letter to the Federal Communications Commission (FCC) in the matter of Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, (WT Docket No. 24-186) (NPRM), issued on July 19, 2024, which seeks to impose new rules that would require “all mobile wireless service providers to unlock handsets 60 days after a consumer’s handset is activated with the provider.”[1]
The NPRM as currently proposed is unnecessary. The wireless industry has adopted standards for cell phone unblocking. Limitations on unblocking exist solely due to merger conditions created by the FCC for select mobile providers. And consumers can choose to purchase unlocked devices either through a device manufacturer or on the secondary market.
Some comments for this proceeding call for the FCC to force providers to immediately unlock a device at point of sale, regardless of whether the customer has entered an agreement for a payment plan with the provider.[2] The National Telecommunications and Information Administration’s submission goes even further by asking the FCC to expand the scope of the unlocking proposal to force all manufacturers to automatically unlock all prepaid and postpaid devices, not just phones, and making the unlocking of a device automatic.[3]
This would not only be regulatory overreach but also unnecessary. Consumers already have the option to do so by purchase an unlocked device directly from the manufacturer. According to the Apple website, “Every iPhone you buy from us online or in an Apple Store is unlocked, with the exception of a few carrier financing options. With an unlocked iPhone, you’re free to go with the carrier of your choice.”[4] Samsung also offers the ability to directly purchase an unlocked device and free choice for a carrier.[5] However, not every customer desires or is able to pay in full for a device and therefore need to take advantage of providers’ financing options.
In 2014, CTIA – The Wireless Association adopted standards for mobile wireless device unlocking that offered consumers the ability to unlock their devices when certain conditions were met.[6] These voluntary standards create an environment that opens the opportunity for consumers to unlock their devices once they are paid off in full.
According to the FCC’s website, “All service providers who signed onto the CTIA Consumer Code for Wireless Service have fully implemented the standards on unlocking. Participants include all nationwide service providers, as well as a number of regional providers. Each participating provider has posted its unlocking policy on its company website and will respond to unlock requests.” The FCC also noted that, “participating providers have agreed to unlock prepaid devices within one year of initial activation, consistent with reasonable time, payment or usage requirements.”[7]
Currently, a limited number of providers are required to unlock phones after 60 days as part of conditions imposed by the federal government on either mergers or acquisitions. Verizon was required to unlock phones following its purchase of 700 MHz C block spectrum licenses, and received a waiver from the FCC on June 25, 2019, allowing it to delay unlocking devices for a period of 60 days.[8] Approval of the T-Mobile/Sprint merger on October 16, 2019, included a requirement to unlock devices after 60 days.[9]
When a customer purchases a mobile plan from a cell phone provider and enters into a financial agreement to purchase a phone through a monthly payment plan, it is critical that the criteria set forth by the contract is met. Regardless of the time in which a cell phone must be unlocked, the provider who sold the device must be reimbursed and made whole for any remaining payments due, whether those payments come directly from the consumer or through a payoff by the customer’s new provider.
The September 23, 2024, reply comments from the Phoenix Center for Advanced Legal and Economic Public Policy Studies (Phoenix Center) questioned the authority of the FCC to interfere with legal financial agreements between a service provider and its customers. The comments noted, “Nothing in the Communications Act grants the Commission the express authority to regulate financial transactions for equipment, and handset locking is a component of such financial agreements.” They added that the proposed imposition of mandatory unlocking policy will raise “the cost of financing handsets, the inevitable consequence of which is to raise effective prices for devices and/or services.”[10]
Rather than force all companies to unlock a device after 60 days, as proposed by the NPRM, the FCC should bring parity to the marketplace by either eliminating the requirement or if the FCC determines that there should be a requirement for companies to unlock devices prior to the termination of consumer financial agreements, to extend the unlocking requirement to 180 days for all providers. I thank you for your kind consideration of these comments.
Sincerely,
Tom Schatz President, CAGW
[1] Federal Communications Commission (FCC), In the Matter of Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, WT Docket No. 24-186, Notice of Proposed Rulemaking, Adopted July 18, 2024, Released July 19, 2024, https://docs.fcc.gov/public/attachments/FCC-24-77A1.pdf.
[3] National Telecommunications and Information Administration, Ex Parté Filing regarding Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, WT Docket No. 24—186, Filed November 1, 2024, https://www.fcc.gov/ecfs/document/1101574328584/1.
[9] FCC, In the Matter of Applications of T-Mobile US, Inc., and Sprint Corporation, For Consent to Transfer Control of Licenses and Authorizations, Applications of American H Block Wireless L.L.C., DBSD Corporation, Gamma Acquisition L.L.C., and Manifest Wireless L.L.C. for Extension of Time, WT Docket No. 18-197, ULS File Nos. 0008741236, 0008741420, 0008741603, and 0008741789 et al., Memorandum Opinion and Order, Declaratory Ruling, and Order of Proposed Modification, Adopted October 16, 2019, Released November 5, 2019, https://docs.fcc.gov/public/attachments/FCC-19-103A1.pdf.
[10] George S. Ford, PhD., and Lawrence J. Spiwak, J.D., “FCC Overreach in Mobile Device Regulation? A Legal and Economic Analysis,” Phoenix Center for Advanced Legal & Economic Policy Studies, Filed with the FCC on September 23, 2024, https://www.fcc.gov/ecfs/document/109230737107069/2.
November 12, 2024
Marlene H. Dortch
Secretary
Federal Communications Commission
45 L Street, N.E.
Washington, D.C. 20554
RE: Ex Parté Submission – WT Docket No. 24-186
Dear Ms. Dortch,
Citizens Against Government Waste (CAGW) is a private, nonprofit, nonpartisan organization dedicated to educating the American public about waste, mismanagement, and inefficiency in government. On behalf of the more than one million members and supports of CAGW, I am submitting this ex parté letter to the Federal Communications Commission (FCC) in the matter of Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, (WT Docket No. 24-186) (NPRM), issued on July 19, 2024, which seeks to impose new rules that would require “all mobile wireless service providers to unlock handsets 60 days after a consumer’s handset is activated with the provider.”[1]
The NPRM as currently proposed is unnecessary. The wireless industry has adopted standards for cell phone unblocking. Limitations on unblocking exist solely due to merger conditions created by the FCC for select mobile providers. And consumers can choose to purchase unlocked devices either through a device manufacturer or on the secondary market.
Some comments for this proceeding call for the FCC to force providers to immediately unlock a device at point of sale, regardless of whether the customer has entered an agreement for a payment plan with the provider.[2] The National Telecommunications and Information Administration’s submission goes even further by asking the FCC to expand the scope of the unlocking proposal to force all manufacturers to automatically unlock all prepaid and postpaid devices, not just phones, and making the unlocking of a device automatic.[3]
This would not only be regulatory overreach but also unnecessary. Consumers already have the option to do so by purchase an unlocked device directly from the manufacturer. According to the Apple website, “Every iPhone you buy from us online or in an Apple Store is unlocked, with the exception of a few carrier financing options. With an unlocked iPhone, you’re free to go with the carrier of your choice.”[4] Samsung also offers the ability to directly purchase an unlocked device and free choice for a carrier.[5] However, not every customer desires or is able to pay in full for a device and therefore need to take advantage of providers’ financing options.
In 2014, CTIA – The Wireless Association adopted standards for mobile wireless device unlocking that offered consumers the ability to unlock their devices when certain conditions were met.[6] These voluntary standards create an environment that opens the opportunity for consumers to unlock their devices once they are paid off in full.
According to the FCC’s website, “All service providers who signed onto the CTIA Consumer Code for Wireless Service have fully implemented the standards on unlocking. Participants include all nationwide service providers, as well as a number of regional providers. Each participating provider has posted its unlocking policy on its company website and will respond to unlock requests.” The FCC also noted that, “participating providers have agreed to unlock prepaid devices within one year of initial activation, consistent with reasonable time, payment or usage requirements.”[7]
Currently, a limited number of providers are required to unlock phones after 60 days as part of conditions imposed by the federal government on either mergers or acquisitions. Verizon was required to unlock phones following its purchase of 700 MHz C block spectrum licenses, and received a waiver from the FCC on June 25, 2019, allowing it to delay unlocking devices for a period of 60 days.[8] Approval of the T-Mobile/Sprint merger on October 16, 2019, included a requirement to unlock devices after 60 days.[9]
When a customer purchases a mobile plan from a cell phone provider and enters into a financial agreement to purchase a phone through a monthly payment plan, it is critical that the criteria set forth by the contract is met. Regardless of the time in which a cell phone must be unlocked, the provider who sold the device must be reimbursed and made whole for any remaining payments due, whether those payments come directly from the consumer or through a payoff by the customer’s new provider.
The September 23, 2024, reply comments from the Phoenix Center for Advanced Legal and Economic Public Policy Studies (Phoenix Center) questioned the authority of the FCC to interfere with legal financial agreements between a service provider and its customers. The comments noted, “Nothing in the Communications Act grants the Commission the express authority to regulate financial transactions for equipment, and handset locking is a component of such financial agreements.” They added that the proposed imposition of mandatory unlocking policy will raise “the cost of financing handsets, the inevitable consequence of which is to raise effective prices for devices and/or services.”[10]
Rather than force all companies to unlock a device after 60 days, as proposed by the NPRM, the FCC should bring parity to the marketplace by either eliminating the requirement or if the FCC determines that there should be a requirement for companies to unlock devices prior to the termination of consumer financial agreements, to extend the unlocking requirement to 180 days for all providers. I thank you for your kind consideration of these comments.
Sincerely,
Tom Schatz
President, CAGW
[1] Federal Communications Commission (FCC), In the Matter of Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, WT Docket No. 24-186, Notice of Proposed Rulemaking, Adopted July 18, 2024, Released July 19, 2024, https://docs.fcc.gov/public/attachments/FCC-24-77A1.pdf.
[2] Taormina Falsitta, “Electronic Frontier Foundation Wants a Zero-Day Limit on Locked Phones,” Broadband Breakfast, August 1, 2024, https://broadbandbreakfast.com/electronic-frontier-foundation-wants-a-zero-day-limit-on-locked-phones/.
[3] National Telecommunications and Information Administration, Ex Parté Filing regarding Promoting Consumer Choice and Wireless Competition Through Handset Unlocking Requirements and Policies, WT Docket No. 24—186, Filed November 1, 2024, https://www.fcc.gov/ecfs/document/1101574328584/1.
[4] “Why buy iPhone Anywhere Else,” Apple.com website, https://www.apple.com/iphone/buy/.
[5] “Why choose Unlocked by Samsung?” Samsung.com website, https://www.samsung.com/us/mobile/phones/unlocked-by-samsung/.
[6] FCC, Cell Phone Unlocking, https://www.fcc.gov/general/cell-phone-unlocking.
[7] FCC, Cell Phone Unlocking FAQs, Will my provider unlock my phone, https://www.fcc.gov/consumers/guides/cell-phone-unlocking-faqs.
[8] FCC, In the Matter of Service Rules for the 68-746, 747-762 and 777-792 MHz Bands, WT Docket No. 06-150, June 25, 2019, https://docs.fcc.gov/public/attachments/DA-19-593A1_Rcd.pdf.
[9] FCC, In the Matter of Applications of T-Mobile US, Inc., and Sprint Corporation, For Consent to Transfer Control of Licenses and Authorizations, Applications of American H Block Wireless L.L.C., DBSD Corporation, Gamma Acquisition L.L.C., and Manifest Wireless L.L.C. for Extension of Time, WT Docket No. 18-197, ULS File Nos. 0008741236, 0008741420, 0008741603, and 0008741789 et al., Memorandum Opinion and Order, Declaratory Ruling, and Order of Proposed Modification, Adopted October 16, 2019, Released November 5, 2019, https://docs.fcc.gov/public/attachments/FCC-19-103A1.pdf.
[10] George S. Ford, PhD., and Lawrence J. Spiwak, J.D., “FCC Overreach in Mobile Device Regulation? A Legal and Economic Analysis,” Phoenix Center for Advanced Legal & Economic Policy Studies, Filed with the FCC on September 23, 2024, https://www.fcc.gov/ecfs/document/109230737107069/2.