Congress Unlocks Cell Phones; President Expected to Sign; Will It Matter?

Today, the U.S. House of Representatives unanimously passed bipartisan legislation that would allow consumers to “unlock” their cellphones when switching providers. This companion Bill to that which already passed in the U.S. Senate is expected to be signed by President Obama and is generally acknowledged as affording Americans the freedom to choose the carrier of their choice for the cellphones they purchase, but it may only be significant in that it actually represents bipartisan unity in the 113th Congress, a legislative body sure to go down in history as one of the most partisan and deadlocked in its ability to govern. The current Congress has approved less than 20%, on average, of the amount of legislation of its immediate predecessors...and abysmal record and far more noteworthy than the legislation I'm commenting on.

What American's want to know and, undoubtedly, will make some assumptions about how this bill affects their ability to do so, is how will this legislation free them to buy the cell phone of their choice and then purchase mobile network services to enable it? While I think most thoughtful consumers recognize that the significantly reduced price they are paying for their expensive smartphones (equivalent to room full of computing power in their parents' generation, reduced to (less than) the size of a pack of cards is enabled by the subsidies provided by the mobile carries (AT&T, Verizon, Sprint, et al) but, in return, they are obliged to sign up for a two year contract with the carrier, the fat margins on that contract more than covering the up front subsidy on the phone. But my own discussions with people suggests that folks' recollection of this fact is dim, at best, when making purchase decisions.

While the new legislation requires carriers to "unlock" the phones allowing them to be attached to a competitor's network, it doesn't force them to do so before the phone subsidy has been paid for. Currently, most contract phones are locked to the cellular provider that sells them, and consumers must obtain permission to unlock phones – even after the phones are paid off and contracts have expired. Consequently, consumers often need to buy a new phone if they want to switch to a different carrier. Now, once a phone is paid off (or a contract for service as expired, the carrier will be required to unlock the phone allowing it to be connected to a competitor's network.

But, let's be clear: it is the deals that phone providers (Apple, Samsung, etc) strike with the carriers to subsidize the phones that make them affordable (typically ~$100 rather than $500-$600), and the carriers require you to sign up for a two-year service contract to cover the cost of their subsidy, and this bill does NOTHING to change that practice. If Samsung initiates a contract with Verizon to be the sole provider of their next great Galaxy phone and Verizon requires you to sign away your first born to purchase that whiz-bang gadget for three dried beans, so be it: this legislation does nothing to prevent that. It merely requires Verizon to unlock that phone at the end of the contract (that you signed and agreed to to get the phone for something you could afford). No doubt, by then, Verizon will be the sole provider of Samsung's new Galaxy phone with the holographic display that projects a naked image of Miley Cyrus singing her new pop hit - the one you SIMPLY MUST HAVE!

So, caveat emptor. The 113th Congress, and the President, would like you to believe that they've worked together in a bi-partisan fashion (funny how blustering to their constituents is primary, unifying force) to advance the laws and governance of business to keep pace with technology and your lust to consume it. And, indeed, there is utility in this bill - it does force the unlocking of phones...but, practically speaking, this will largely be older phones... ones that are paid for by you. This is legislation that would have been far more useful five years ago than today, you know when the Digital Millennium Copyright Act was still and newly powerful in its terrorization of the general populace . Oh, and it will likely present some obstacles to the phone providers and the carriers in the short term, which could cause the price of phones to rise (unlikely, I think), but it will do little to increase the options for those of you with gadget lust. It will most likely benefit those who are willing to use an iPhone 3 or Galaxy 2, today, with the carrier of their choice. Oh yeah, and it doesn't include devices like tablets with cellular connectivity, merely directing the Librarian of Congress to consider whether other electronic devices could be unlocked legally.

You can read more about it here and here.