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Petition Aims To Overturn Ban on Unlocked Cellphones
By Will Oremus | Posted Monday, Jan. 28, 2013, at 4:45 PM ET
SLATE
As of this past weekend, if you unlock your cellphone—that is, alter it so that it will work on a network other than that of the carrier from which you purchased it—you could be breaking the law. The rule change comes not from Congress, per se, but by fiat of the Library of Congress, which decided in October to close an exemption in the Digital Millenium Copyright Act that had made the practice legal.
The change went into effect Saturday, and some techies have been howling. “The idea that a decision that will affect so many, and involves so much money, could rest on a single unelected person is bizarre at best and absurd at worst,” Mark Sullivan wrote in PCWorld. Derek Khanna, the former Republican Study Committee staffer who made news last fall as the author of a policy memo on copyright reform that went viral, called the rule “the most ridiculous law of 2013 so far.”
Now Sina Khanifar, a 27-year-old entrepreneur from San Francisco, is trying to galvanize the backlash with a petition on WhiteHouse.gov: “Make Unlocking Cell Phones Legal.” From the petition:
Consumers will be forced to pay exorbitant roaming fees to make calls while traveling abroad. It reduces consumer choice, and decreases the resale value of devices that consumers have paid for in full. The Librarian noted that carriers are offering more unlocked phones at present, but the great majority of phones sold are still locked. We ask that the White House ask the Librarian of Congress to rescind this decision, and failing that, champion a bill that makes unlocking permanently legal.
When I talked to Khanifar by phone Monday, he told me the issue is “near and dear” to him. “My first company, while I was in college, was unlocking phones. It’s actually what got me through college.” It also nearly got him in trouble: Khanifar says Motorola tried to sue him over a website he had created that told people how to unlock its Razr phone, a big seller at the time. A couple of academic lawyers took his side, he says, and the suit never materialized. Today the story might be different.
The Library of Congress justified its decision by pointing out that wireless carriers’ business models rely on being able to lock customers into contracts. But Khanifar points out that unlocking a phone doesn’t get you out of your contract, it just makes it non-exclusive. He says he has grown accustomed to swapping out the SIM card on his own unlocked device when he travels overseas, which he does frequently. “I know I’m going to hate it when I go abroad and can’t use my iPhone,” he says. “The whole arrangement just doesn’t make much sense.”
His petition, created on Jan. 24, had racked up some 28,000 signatures as of Monday afternoon. Until recently, that would have been enough to prompt an official response, but the White House recently hiked that threshold from 25,000 to 100,000. Khanifar says that’s a high bar, but he’s optimistic he can get there.
Khanna, the former RSC staffer, says he supports Khanifar’s petition, but he’s also hoping to mobilize some more traditional activism around the issue. “I think it’s one of those things where you need to go out and show that there are actually people who are incensed by this. That there are people who think this is a big deal and a clear example of excessive regulation.* I’m trying to figure out the next steps.”
The White House petition page is here:
https://petitions.whitehouse.gov/petition/make-unlocking-cell-phones-legal/1g9KhZG7
SF Chronicle:
Unlock your phone at your own peril
By JamesTemple, Chronicle Columnist
Updated 5:02 pm, Monday, January 28, 2013
(01-28) 13:26 PST San Francisco -- As of this past Saturday, it's illegal to unlock your cell phone. That means, even if you own it outright, you can't alter the device to make it to work on another carrier without risking a fine.
Why shouldn't you be able to do whatever you want with your own property? Because cell phone companies want to sell more phones and the Library of Congress rolled over for them.
That's not how the industry puts it, of course, but it is the truth.
The broadly written Digital Millennium Copyright Act of 1998 made it illegal to create devices or services that allowed people to sidestep technology protecting copyrighted works. It was mainly geared toward digital rights management tools of the day that prevented you from making multiple copies of downloaded songs or DVDs.
But the Library of Congress, tasked with carving out exceptions every few years under the law, has excluded unlocking cell phones several times because, well, it has nothing to do with copyrighted works!
Nevertheless, under pressure from carriers and the CTIA-The Wireless Association trade group, the Library of Congress switched its stance and agreed to eliminate that exemption in October. The change went into effect this past weekend.
Now if you unlock your phone for your own use, you could face a suit or fine. Businesses that seek to profit from selling unlocked phones, the area where carriers are more likely to focus their attention, could face criminal charges.
Subsidies cited
It's roughly equivalent to declaring that you can plug your TV into Comcast cable service, but not Time Warner. The only difference is that, in the case of phones, your carrier often subsidizes the initial purchase price. And that's where the industry is hanging its argument.
Michael Altschul, general counsel for CTIA, told the New York Times that prohibiting people from unlocking their phones protected the carriers' investments in the subsidies. Otherwise, he suggested, people could unlock their devices and sell them at a higher price, an abuse that could threaten the industry's ability to continue providing the subsidies.
"It's allowing that business practice to go forward at a time when the price of devices continues to grow," Altschul said.
But this largely ignores the way the subsidies actually work - and the fact that carriers have generated huge profits under this model for the years while the exemption was in effect.
I may get to buy an iPhone for what seems like $200, instead of say $600, but in exchange I pay for that difference over the course of a two-year contract.
Significant fees
I can't just buy a subsidized phone, unlock it, sell it and collect a cool profit. If I unload the phone, I'm still obligated to either continue paying through the end of my contract or to cough up a sizable early termination fee. Both are intended the cover the cost of the up-front subsidy.
For expensive phones, AT&T's termination fee is $325 minus $10 for every month that has already passed on the contract.
"The price of an unlocked iPhone (especially in countries outside of the U.S.) may be much greater than $325 plus the $200 subsidized price a customer pays - creating an opportunity for resale," Altschul said in an e-mail response to my inquiry.
I suppose. But if you managed to sell your iPhone the day you bought it, AT&T is still walking away with $525.
That's below retail for an unlocked phone, but almost certainly not below the company's cost. And since it would require signing up for a contract and the hassle of selling the phone, I can't imagine some vast criminal conspiracy to exploit this relatively narrow price gap one phone at a time.
And if there actually was rampant abuse, the industry always has the option of raising the price of the early-termination fee or initial cost.
'Absurd' situation
But that's not what any of this is about.
This is about carriers keeping people on their networks and squeezing the after-market for phone sales. In other words: It's about enormously profitable companies using the legal system to make more money still, at the expense of consumers.
"You've got the Library of Congress purporting to regulate the after-market in mobile phones; the absurdity of that situation highlights the problems with (the Digital Millennium Copyright Act)," said Mitch Stoltz, staff attorney at the Electronic Frontier Foundation in San Francisco. "But a lot of electronics companies have used the law opportunistically."
Indeed, Chamberlain Group, a maker of garage door openers, sought and failed to exploit the law to prevent its rival from selling a universal remote. Printer company Lexmark tried and failed to use it against a company offering to refill toner cartridges.
What did either have to do with copyright law? Exactly as much as unlocked phones.
But what really infuriates me here is that these are the very companies that cry about the importance of the free market every time someone threatens to raise their taxes or impose new market regulations. Yet they're perfectly happy to stomp on the property rights of their own customers.
Unless I'm using the phone I bought and paid for to bludgeon someone, what business is it of carriers, the Library of Congress or law enforcement what I do with my personal property?
James Temple is a San Francisco Chronicle columnist. E-mail: jtemple@sfchronicle.com Twitter: @jtemple
By Will Oremus | Posted Monday, Jan. 28, 2013, at 4:45 PM ET
SLATE
As of this past weekend, if you unlock your cellphone—that is, alter it so that it will work on a network other than that of the carrier from which you purchased it—you could be breaking the law. The rule change comes not from Congress, per se, but by fiat of the Library of Congress, which decided in October to close an exemption in the Digital Millenium Copyright Act that had made the practice legal.
The change went into effect Saturday, and some techies have been howling. “The idea that a decision that will affect so many, and involves so much money, could rest on a single unelected person is bizarre at best and absurd at worst,” Mark Sullivan wrote in PCWorld. Derek Khanna, the former Republican Study Committee staffer who made news last fall as the author of a policy memo on copyright reform that went viral, called the rule “the most ridiculous law of 2013 so far.”
Now Sina Khanifar, a 27-year-old entrepreneur from San Francisco, is trying to galvanize the backlash with a petition on WhiteHouse.gov: “Make Unlocking Cell Phones Legal.” From the petition:
Consumers will be forced to pay exorbitant roaming fees to make calls while traveling abroad. It reduces consumer choice, and decreases the resale value of devices that consumers have paid for in full. The Librarian noted that carriers are offering more unlocked phones at present, but the great majority of phones sold are still locked. We ask that the White House ask the Librarian of Congress to rescind this decision, and failing that, champion a bill that makes unlocking permanently legal.
When I talked to Khanifar by phone Monday, he told me the issue is “near and dear” to him. “My first company, while I was in college, was unlocking phones. It’s actually what got me through college.” It also nearly got him in trouble: Khanifar says Motorola tried to sue him over a website he had created that told people how to unlock its Razr phone, a big seller at the time. A couple of academic lawyers took his side, he says, and the suit never materialized. Today the story might be different.
The Library of Congress justified its decision by pointing out that wireless carriers’ business models rely on being able to lock customers into contracts. But Khanifar points out that unlocking a phone doesn’t get you out of your contract, it just makes it non-exclusive. He says he has grown accustomed to swapping out the SIM card on his own unlocked device when he travels overseas, which he does frequently. “I know I’m going to hate it when I go abroad and can’t use my iPhone,” he says. “The whole arrangement just doesn’t make much sense.”
His petition, created on Jan. 24, had racked up some 28,000 signatures as of Monday afternoon. Until recently, that would have been enough to prompt an official response, but the White House recently hiked that threshold from 25,000 to 100,000. Khanifar says that’s a high bar, but he’s optimistic he can get there.
Khanna, the former RSC staffer, says he supports Khanifar’s petition, but he’s also hoping to mobilize some more traditional activism around the issue. “I think it’s one of those things where you need to go out and show that there are actually people who are incensed by this. That there are people who think this is a big deal and a clear example of excessive regulation.* I’m trying to figure out the next steps.”
The White House petition page is here:
https://petitions.whitehouse.gov/petition/make-unlocking-cell-phones-legal/1g9KhZG7
SF Chronicle:
Unlock your phone at your own peril
By JamesTemple, Chronicle Columnist
Updated 5:02 pm, Monday, January 28, 2013
(01-28) 13:26 PST San Francisco -- As of this past Saturday, it's illegal to unlock your cell phone. That means, even if you own it outright, you can't alter the device to make it to work on another carrier without risking a fine.
Why shouldn't you be able to do whatever you want with your own property? Because cell phone companies want to sell more phones and the Library of Congress rolled over for them.
That's not how the industry puts it, of course, but it is the truth.
The broadly written Digital Millennium Copyright Act of 1998 made it illegal to create devices or services that allowed people to sidestep technology protecting copyrighted works. It was mainly geared toward digital rights management tools of the day that prevented you from making multiple copies of downloaded songs or DVDs.
But the Library of Congress, tasked with carving out exceptions every few years under the law, has excluded unlocking cell phones several times because, well, it has nothing to do with copyrighted works!
Nevertheless, under pressure from carriers and the CTIA-The Wireless Association trade group, the Library of Congress switched its stance and agreed to eliminate that exemption in October. The change went into effect this past weekend.
Now if you unlock your phone for your own use, you could face a suit or fine. Businesses that seek to profit from selling unlocked phones, the area where carriers are more likely to focus their attention, could face criminal charges.
Subsidies cited
It's roughly equivalent to declaring that you can plug your TV into Comcast cable service, but not Time Warner. The only difference is that, in the case of phones, your carrier often subsidizes the initial purchase price. And that's where the industry is hanging its argument.
Michael Altschul, general counsel for CTIA, told the New York Times that prohibiting people from unlocking their phones protected the carriers' investments in the subsidies. Otherwise, he suggested, people could unlock their devices and sell them at a higher price, an abuse that could threaten the industry's ability to continue providing the subsidies.
"It's allowing that business practice to go forward at a time when the price of devices continues to grow," Altschul said.
But this largely ignores the way the subsidies actually work - and the fact that carriers have generated huge profits under this model for the years while the exemption was in effect.
I may get to buy an iPhone for what seems like $200, instead of say $600, but in exchange I pay for that difference over the course of a two-year contract.
Significant fees
I can't just buy a subsidized phone, unlock it, sell it and collect a cool profit. If I unload the phone, I'm still obligated to either continue paying through the end of my contract or to cough up a sizable early termination fee. Both are intended the cover the cost of the up-front subsidy.
For expensive phones, AT&T's termination fee is $325 minus $10 for every month that has already passed on the contract.
"The price of an unlocked iPhone (especially in countries outside of the U.S.) may be much greater than $325 plus the $200 subsidized price a customer pays - creating an opportunity for resale," Altschul said in an e-mail response to my inquiry.
I suppose. But if you managed to sell your iPhone the day you bought it, AT&T is still walking away with $525.
That's below retail for an unlocked phone, but almost certainly not below the company's cost. And since it would require signing up for a contract and the hassle of selling the phone, I can't imagine some vast criminal conspiracy to exploit this relatively narrow price gap one phone at a time.
And if there actually was rampant abuse, the industry always has the option of raising the price of the early-termination fee or initial cost.
'Absurd' situation
But that's not what any of this is about.
This is about carriers keeping people on their networks and squeezing the after-market for phone sales. In other words: It's about enormously profitable companies using the legal system to make more money still, at the expense of consumers.
"You've got the Library of Congress purporting to regulate the after-market in mobile phones; the absurdity of that situation highlights the problems with (the Digital Millennium Copyright Act)," said Mitch Stoltz, staff attorney at the Electronic Frontier Foundation in San Francisco. "But a lot of electronics companies have used the law opportunistically."
Indeed, Chamberlain Group, a maker of garage door openers, sought and failed to exploit the law to prevent its rival from selling a universal remote. Printer company Lexmark tried and failed to use it against a company offering to refill toner cartridges.
What did either have to do with copyright law? Exactly as much as unlocked phones.
But what really infuriates me here is that these are the very companies that cry about the importance of the free market every time someone threatens to raise their taxes or impose new market regulations. Yet they're perfectly happy to stomp on the property rights of their own customers.
Unless I'm using the phone I bought and paid for to bludgeon someone, what business is it of carriers, the Library of Congress or law enforcement what I do with my personal property?
James Temple is a San Francisco Chronicle columnist. E-mail: jtemple@sfchronicle.com Twitter: @jtemple
