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There may be competition and innovation concerns regarding the new unlock ban on new smartphones.ZoomThursday night during an event in San Francisco, FCC chairman Julius Genachowski said that the commission will investigate a recent law passed by Washington that bans consumers from unlocking new smartphones acquired through mobile carriers. The law arrived on January 26, 2013 with a hefty $500,000 fine and up to 5 years in prison for anyone found liable.Recently outraged consumers have taken to the Internet to sign a WeThePeople petition that successfully reached the 100,000 threshold required for a White House response. "When the White House weighs in on the cellphone unlocking petition it will then be incumbent on Congress to then address this problem," said Derek Khanna of Forbes who help spearhead the petition. "It’s unfortunate that it’s easier to get the President on the record than to get one Member of Congress on the record."Genachowski said on Thursday night that the ban actually raises both competition and innovation concerns. Unfortunately, he's not sure if the FCC has any authority, but if there's any possible avenue the commission can take, they'll exert every ounce of influence to reverse the decision. "It’s something that we will [examine] at the FCC to see if we can and should enable consumers to use unlocked phones," he said.In 1998, Congress passed the Digital Millennium Copyright Act (DMCA) to outlaw technologies that bypass copyright protections. It allows the Library of Congress to determine and issue exemptions for the law which for six years included cell phone unlocks. In October 2012 this particular class of technology was not renewed for exemption by the Library of Congress, and Congress itself "refused to act". This same ruling went into effect on January 26.Now the White House must answer to the people. "Public Knowledge’s question on this issue for President Obama was one of the most popular for President Obama’s Google Plus Fireside Hangout," Forbes writes. "While it was not asked of President Obama at the time, he will now have an opportunity to address it."As TechCrunch points out, the WeThePeople petition sitting on Obama's desk is a symbol representing customers fighting against corporate America – in this case wireless carriers – who thrive on lucrative contracts that literally chain customers for two years.Unfortunately, subsidizing doesn't mean a smartphone is the property of a customer as soon as it's booted up for the first time. Subsidizing means customers are virtually "renting-to-own" and until the contract is fulfilled, it's the property of the carrier. The agreement is that customers can have a phone for little or no cost up front in return for sticking with a mobile service for two years (which pays off the remaining balance). Naturally that ball-and-chain scheme doesn't apply to "unlocked" phones purchased for the full price -- phones still retained after the two-year period should be free for unlocking as well.That said, the new law is seemingly protecting wireless carriers from customers intent on hacking their property. There's a good chance this was the thought process flowing through the Library of Congress when it let the exemption lapse, and what the White House will likely say in response to the petition. Does the new ban hinder competition and innovation? Should carriers be allowed to ban smartphone unlocking? When does a smartphone actually become your property?
President Obama's idea for a petition system has come in for a lot of criticism – some of it deserved – but if the latest response to a petition on mobile phone unlocking is anything to go by, the system has definite benefits.The petition was created following the decision by the Librarian of Congress to review the remit of the Digital Millennium Copyright Act and criminalize those consumers who want to unlock their handsets from a network. After it quickly reached the newly required 100,000 signature minimum, the administration issued a coordinated response, with the Librarian, the FCC, and the administration all calling for reform."The White House agrees … that consumers should be able to unlock their cell phones without risking criminal or other penalties," said R. David Edelman, senior White House advisor for internet, innovation, and privacy."In fact, we believe the same principle should also apply to tablets, which are increasingly similar to smart phones. And if you have paid for your mobile device, and aren't bound by a service agreement or other obligation, you should be able to use it on another network. It's common sense."The current administration would support efforts to get legislation on the books making mobile unlocking permanently legal, he said, and he pledged to work with Congress and the mobile phone companies to remedy the situation. Edelman also said the FCC would have an important role to play going forward, and the agency issued a statement of its own on the matter."From a communications policy perspective, this raises serious competition and innovation concerns, and for wireless consumers, it doesn't pass the common sense test," said FCC top dog Julius Genachowski."The FCC is examining this issue, looking into whether the agency, wireless providers, or others should take action to preserve consumers' ability to unlock their mobile phones. I also encourage Congress to take a close look and consider a legislative solution."Meanwhile, the Library of Congress also issued a statement saying that it valued the recent "thoughtful discussions" it has had with the White House on the issue and that the decision would "benefit from a review." But under the terms of the DMCA, it said, its hands are tied for the moment."The rulemaking is a technical, legal proceeding and involves a lengthy public process. It requires the Librarian of Congress and the Register of Copyrights to consider exemptions to the prohibitions on circumvention, based on a factual record developed by the proponents and other interested parties," it said."The officials must consider whether the evidence establishes a need for the exemption based on several statutory factors. It does not permit the U.S. Copyright Office to create permanent exemptions to the law."So, on the face of it, the petition does seem to have worked, at least at bringing attention to the issue. Actually getting it resolved is another matter, if the buck-passing seen in all of these statements is anything to go by.Sina Khanifar, one of the founders of the petition, said that he was encouraged by the show of support and was now concentrating on building "a SOPA-style organization" to get the law permanently changed. The new organization will be announced on Tuesday. ®
After the FCC said that it planned to investigate a recent decision to make smartphone unlocking illegal, U.S. Senator Amy Klobuchar said that she is introducing legislation this week that will re-enable consumers the ability to unlock their phones. Klobuchar is a member of the Senate Commerce Committee and chairs the Judiciary Antitrust Subcommittee.The announcement arrives after the White House responded to a WeThe People petition urging the Obama administration to reverse the unlocking decision, agreeing that consumers should have the right to use their phones on a different carrier once the contract is fulfilled. As it stands now, consumers face a $500,000 fine and up to 5 years in prison if found liable."Consumers should be free to choose the phone and service that best fits their needs and their budgets," Klobuchar said on Tuesday. "We need to make sure consumers are getting a fair deal and today’s announcement is a welcome step towards implementing consumer-friendly policies in the wireless industry. That’s why I’m introducing legislation this week to get rid of the ban on unlocking cell phones."The controversy began in January when the Library of Congress allowed an exemption of the Digital Millennium Copyright Act, or DMCA, to lapse. It actually expired in October 2012, but a grace period allowed the government to renew the exemption before the end of January. The exemption was added to the DMCA just after it went into effect so that unlocking smartphones wouldn't be illegal. Now consumers who purchase a smartphone after January 2013 cannot move the device to another carrier even if the contract is fulfilled."If you have paid for your mobile device, and aren't bound by a service agreement or other obligation, you should be able to use it on another network," said White House Senior Advisor for Internet, Innovation, & Privacy David Edelman. "It's common sense, crucial for protecting consumer choice, and important for ensuring we continue to have the vibrant, competitive wireless market that delivers innovative products and solid service to meet consumers' needs."
