Is Unlocking Cell Phones Legal?

Previously if you wanted to unlock your cell phone in order to move it to a new carrier, you would face a bunch of legal red tape which in some instances meant that unlocking your mobile phone could have been considered illegal. This has been a big sticking point for many wireless customers as it would seem logical that if you own a phone you should be able to use it with whatever wireless service you want.

Now thanks to a new unlock cell phone law signed by President Obama on August 1st 2014, called the “Unlocking Consumer Choice and Wireless Competition Act” it is perfectly legal to unlock your cell phone now. This is a huge win for both mobile consumers and small wireless companies like the many MVNOs we discuss on this website.

This new law repeals a previous part of the 1998 Digital Millennium Copyright Act which made it illegal for customers of a wireless carrier to unlock their cell phones, ie. “circumvent” their technology, without the permission of that wireless carrier.

This is great news in a time where Washington hasn’t gotten much done and hardly cooperates anymore. It is finally nice to see a law that actually makes sense, supports consumer choice, and fosters a competitive robust marketplace within the wireless industry. Even the CTIA Wireless Association, a wireless industry lobby group, commended the law by saying the following:

“Again, CTIA thanks Senator Leahy and Congressman Goodlatte for their work in crafting a piece of legislation that promotes consumer flexibility without imposing new regulations on America’s wireless carriers. They are to be commended for finding an appropriate balance.”

“Even though the vast majority of Americans enjoy upgrading to new devices once their contract terms are fulfilled, we recognize that some consumers may want to unlock their devices to move to another carrier. Like the voluntary commitment CTIA’s carriers entered into last December, this bill enables that process. Users should keep in mind unlocked does not necessarily mean interoperable, as carrier platforms and spectrum holdings vary.”

It should be mentioned that most wireless carriers already allowed cell phone unlocking but only if your contract was completed. Thus it might not be a huge change to some people, but it is still good for those who quit their contract to move to another carrier and still want to use the same phone. It is this type of switching decision which I believe will cause the most competition between wireless companies due to this new law.

There are still some issues that one might run into when switching carriers with an unlocked phone though. First, as the CTIA mentioned the ability to unlock a phone does not necessarily mean it will be interoperable with other carriers. A good example of this is Republic Wireless who can only use phones that have their unique handover technology installed and is not able to use unlocked phones bought from outside carriers.

Second, if you were to unlock a cell phone while under contract with your current wireless company you could still incur penalty fees. These penalty fees are typically due to the fact that many of these companies heavily subsidize the price of the phone you buy if you sign up for a two year contract, thus allowing them to ensure they recoup the retail costs of the phone you likely received at a heavy discount.

Overall, it’s nice to know that unlocking cell phones is now legal and that we can take advantage of cheap cell phone plans much more efficiently and frugally with this new law passed.

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