FCC, TracFone Reach Settlement: Provider Will Now Unlock Customers Phones’ Like They Said They Would



Unlocking your phone is legal, and the wireless industry agreed months ago to a set of conditions that went into effect earlier this year that allow consumers to do just that. Those companies all promised the FCC that they had a plan. And when you tell a federal agency that you have a plan, you probably actually should, and ought to follow it, too. One company didn’t, and that has landed them in some hot water with the commission.

TracFone sells prepaid wireless phones. They service millions of consumers but, specifically, also provide phones to millions of consumers enrolled in the FCC’s Lifeline subsidy program.

Lifeline: What is it, and how does it work?

In 2014, the President signed into law a piece of legislation that made it legal for you to unlock your own phone. In February of this year, the entire wireless industry — voluntarily, but in cooperation with the FCC — adopted a set of standards that would allow all consumers to have their phones unlocked. However, TracFone apparently missed that memo, and was not entirely cooperating.

As the official Consent Decree (PDF) explains, TracFone certified last year that it would comply with the unlocking rules for its Lifeline customers in the 2015 program year. But when the rules went into effect on February 11, the day everyone else started unlocking phones, TracFone still did not have a process in place for letting their customers unlock their devices, and that’s a no-no.

The FCC opened an investigation, which came to a close with the settlement TracFone and the commission reached this week. Consumers will indeed be able to unlock their TracFone phones, but old equipment can’t necessarily be switched on a dime. So the new plan goes something like this:

  • By September 1, TracFone will have a clear unlocking policy, that they will put on their website and send in a text message to all their eligible users.
  • Eligible users with old phones can trade them in for cash refunds equal to the phone’s trade-in value.
  • By May 1 of next year, non-Lifeline TracFone customers can trade in their old phones toward credit for unlocking ones, and Lifeline customers can straight up trade in their phones for unlocking ones.

TracFone also has to pay a $400,000 per month “offset” into the Universal Service Fund (which funds Lifeline) until all of their Lifeline customers have unlockable phones, which will probably motivate them to hit or beat their deadlines.

“Unlocking of cell phones has been widely embraced by the wireless industry and by consumers across the country,” Travis LeBlanc, head of the FCC’s Enforcement Bureau, said in a statement. “Today’s agreement ensures that millions of eligible TracFone customers will be able to use their phones on any compatible network they choose.”

The FCC estimates that at least 8 million TracFone customers will benefit from the settlement, to the approximate value of $80 million.

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