T-Mobile to FCC: impose unlocking policy and watch us scale back phone discounts
The Federal Communications Commission (FCC) is considering a rule that would require carriers to unlock smartphones within 60 days of activation. T-Mobile had a virtual meeting with the Commission on October 15 to explain how such a law could backfire.
Telecom companies sell smartphones at drastically lower prices than manufacturers and retailers. In return, they put software in those phones that prevent you from switching to another provider until the contractual obligations are met. Usually, you are required to stay with a carrier until your device has been paid off.
In short, you are beholden to a carrier because of the discount they offer on a new phone. From a carrier's perspective, phone locks allow them to recoup the cost of the device through bills.
The FCC believes that customers should have the freedom to choose a provider who is providing the best value. The Commission wants to enforce a uniform 60-day unlocking policy to bolster competition and reward innovation.
T-Mobile and AT&T have been vocally opposing the proposed bill, arguing it would impact their ability to offer high discounts, making phones unaffordable for low-income consumers.
Carriers like T-Mobile discount cutting-edge devices heavily but lock customers to their network in return. | Image Credit - T-Mobile
In a new filing, T-Mobile reiterates that its current unlocking policies benefit its customers as they allow it to offer generous discounts. T-Mobile also says that there's no evidence that customers have been harmed by its unlocking policies.
T-Mobile says that the rule would force carriers to slash the discounts offered on new handsets, impacting customers. The carrier believes its prepaid customers would see discounts reduced by 40 to 70 percent for devices from Apple, Samsung, and Motorola.
The company also warns that an unlocking policy would "leave providers little choice but to limit their handset offers to lower cost and often lesser performing handsets."
Lastly, the company has accused the FCC of regulatory overreach. It also suggests that the Commission should address carrier-specific issues individually instead of enforcing industry-wide laws when the current system is working perfectly for both customers and companies. This was likely in reference to Verizon, who previously called out the FCC for not having a uniform unlocking policy.
Verizon is already required to unlock phones after 60 days as a condition of its TracFone purchase and 700MHz spectrum acquisition in 2021.
Currently, different providers have different unlocking rules, which leads to confusion. T-Mobile, for instance, agreed to a 60-day unlocking policy for Mint customers, but requires some prepaid customers to stay with it for at least 365 days.
The FCC will have to tread carefully as the smartphone market is only now recovering from the pandemic and lower carrier subsidies could put the industry in a funk again.
FCC OKs Cingular\'s purchase of AT&T Wireless
Things that are NOT allowed: