A year ago, the Librarian of Congress — who has the authority to interpret the fine points of the much-derided Digital Millennium Copyright Act, inexplicably reversed his previous rulings regarding the rights of consumers to unlock wireless devices by making it illegal for people to unlock new phones and tablets without permission from their wireless provider. That change went into effect in January, and since then, everyone from consumers to lawmakers to the White House have declared it a huge mistake that needs to be rethought. Today, new FCC Chairman Tom Wheeler urged the wireless industry to put voluntary standards in place that would at least make it easier for consumers to know when they can unlock their devices.

The big issue with locking and unlocking devices is that most people don’t pay face value for their phones, but instead get them as part of two-year contracts with their wireless providers, who subsidize the retail cost of the devices. Even people who sign up for one of the newer programs where you eventually pay full price for the phone are still under that carrier’s thumb until the device is paid off in full. Thus, the wireless industry has long held that you shouldn’t be able to unlock that phone and take it to another carrier without first checking with your current provider.

But when that contract is up, or when you’ve paid your early termination fee, why should you need the carrier’s permission and assistance to unlock your device, something consumers had legally been able to do on their own since 2006?

One of the arguments made by the wireless industry involves the (often unwanted) apps and other software placed on phones by the carrier. The wireless industry maintains that you don’t own that software even if you own the phone, but are merely using it per the terms of a licensing agreement (that you can’t turn down). So again, the industry — and now the Librarian of Congress — says you need the carrier’s permission to take that phone elsewhere.

And while some lawmakers have pushed for new laws that would clarify this point and give consumers who own their phones outright the ability to do what they please with them, the FCC has been trying to work with CTIA — The Wireless Association for several months to come up with a voluntary standard that would at least make the process as painless as possible for consumers.

After eight months of back-and-forth — during which FCC Chairman Julius Genachowski stepped down — newly installed FCC Chair Wheeler has decided it’s time for CTIA to agree to the voluntary standards or face new regulations.

In a letter to CTIA CEO Steve Largent (yes, that Steve Largent), Wheeler breaks down what he sees as the five requirements for revised unlocking standards for the CTIA Consumer Code:

1. A clear, concise, and readily accessible policy on unlocking.

2. That wireless companies agree to unlock mobile wireless devices for customers, former customers, and legitimate owners when the applicable service contract, installment plant or ETF [early termination fee] has been fulfilled.

3. Wireless providers will take the proactive step of notifying customers when their devices are eligible for unlocking and/or automatically unlock devices when eligible, without an additional fee.

4. That carriers will either process unlocking requests or provide an explanation of denial within two business days.

5. Providers will unlock devices for military personnel upon deployment.

Wheeler says that CTIA and FCC appear to be seeing eye-to-eye on all but one of these conditions. If you guessed #3, you’d be correct. Seems like the wireless industry doesn’t mind making the unlocking process easier, but it doesn’t want to tell you when your device can be unlocked.

This is a particularly bad sticking point, writes Wheeler, who says that, “Absent the consumer’s right to be informed about unlocking eligibility, any voluntary program would be a hollow shell.”

The letter throws down the deadline of the December holidays for CTIA to voluntarily make these changes or face the fun of being further regulated by the FCC.

“Enough time has passed,” writes Wheeler, “and it is now time for the industry to act voluntarily.”

George Slover, Senior Policy Counsel for Consumers Union expressed the organization’s optimistic view of the Chairman’s letter.

“We are pleased that cell phone unlocking appears to be a top priority for the new Chairman and we welcome movement on the issue,” says Slover. “We have continually advocated that any solution to this consumer problem be comprehensive and apply to the broadest range of wireless devices. It is critical that consumers know that they have this right and how to take advantage of it. We look forward to seeing how industry responds to the Chairman’s push.”

Here is a PDF of the letter, or you can read the full text below:

Dear Steve,

During my first week of the job, I continually emphasized the importance of competition and the FCC’s receptiveness to voluntary industry activities to promote competition. For eight months, the FCC staff has been working with CTIA on an amendment to your Consumer Code in which this industry would address consumers’ rights to unlock their mobile wireless devices once their contracts are fulfilled.

The Commission has indicated that any such policy must contain five parts: (a) provide a clear, concise, and readily accessible policy on unlocking; (b) unlock mobile wireless devices for customers, former customers, and legitimate owners when the applicable service contract, installment plant or ETF [early termination fee] has been fulfilled; (c) affirmatively notify customers when their devices are eligible for unlocking and/or automatically unlock devices when eligible, without an additional fee; (d) process unlocking requests or provide an explanation of denial within two business days; and (e) unlock devices for military personnel upon deployment. It appears that CTIA and the FCC are in agreement on all but the third item regarding consumer notification. Absent the consumer’s right to be informed about unlocking eligibility, any voluntary program would be a hollow shell.

We are anxious to work with you and your members to resolve this matter expeditiously. Enough time has passed, and it is now time for the industry to act voluntarily or for the FCC to regulate. Let’s set a goal of including the full unlocking rights policy in the CTIA Consumer Code before the December holiday season.

We look forward to working with you on this policy as well as continuing to work together after its adoption to monitor its implementation.

Sincerely,
Tom Wheeler
Chairman

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