When a consumer purchases a phone from a specific service provider, their phone may be locked into that service provider even after the contract has been fulfilled. That meant that if a consumer wanted to switch providers, they would need to purchase a new phone even if they wanted to use the phone they already had. This often meant that even if an alternative provider offered a less expensive plan they wanted, it would cost more to switch since they would need to buy a new phone in the process.
It also made it difficult for consumers to sell a phone they no longer wanted. Since the phone was locked to a specific carrier, it ended up being worth less than if it was free to be used with any service provider. By making it legal to unlock cellphones, it should be easier and more profitable for consumers to sell their old phones, and for consumers to obtain older phones inexpensively to use on a variety of networks. It also has the potential of keeping millions of phone out of landfills, since selling or giving away the phone becomes a more viable option.
For those who travel overseas, it also will mean they can get coverage on their phone from overseas providers. This can be less expensive than renting a phone when traveling, but could be a problem for phones that were locked.
The law is named the Unlocking Consumer Choice and Wireless Competition Act (PDF), and passed in the House and Senate earlier last month. Now that it’s signed, it will repeal a ruling by the Library of Congress allowing strict enforcement of locked phones through copyright laws due to the evolving cellphone marketplace. However, it won’t last forever. The law will be reconsidered in 2015 by the Library of Congress, then every 3 years after that. The Library of Congress also must review whether other devices such as tablets should be allowed to be unlocked like phones.
The White House noted the new law as a win-win for all involved: good for the American consumer, good for wireless competition and a win for Congress with the bipartisan support for making the law a reality.
(Photo courtesy of Rupert Ganzer)