Freedom “2” Speak

Bzzz. Bzzz. Bzzz. Bzzz. *Silence.* The smart phone apocalypse has come.

The 1998 Digital Millennium Copyright Act (“DMCA”) criminalizes electronically decoupling a mobile phone from its contracted service provider, otherwise known as “unlocking”:“No person shall circumvent a technological measure that effectively controls access to a work protected under this title.”

“Section 1201 also makes it illegal to circumvent the access controls on DVDs, e-books and video games to make bootlegged copies for sale on the street or swapping online. It also makes it illegal to manufacture or sell devices whose main purpose is to circumvent the digital locks on copyrighted material.”

The DMCA was enacted to protect, and thereby enable the continued development of, copyrighted and copyrightable advances. The regulations surrounding electronic access to digitally-stored and digitally-created media serve to protect intellectual property in a highly interconnected world from improper use and illegal secondary markets.

Instead it is requiring that we choose between our phones and the freedom to switch to our desired new cellular phone service providers.

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In October 2012, the Library of Congress decided against renewing the exception to the DMCA, which allowed for cell phones to be unlocked by persons other than the phone-issuing service provider.

As of January 26 of this year, newly purchased phones may not be legally unlocked by anyone other than the provider.

The texting, tweeting, pinning, and instagramming public did not take the news sitting down. They exercised their e-voice through an online “We The People” Petition to the White House.

The White House responded in a statement by David Edelman, White House Senior Advisor for Internet, Innovation, and Privacy:

Thank you for sharing your views on cell phone unlocking with us through your petition on our We the People platform. …

The White House agrees with the 114,000+ of you who believe that consumers should be able to unlock their cell phones without risking criminal or other penalties. 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, 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. …

The Obama Administration would support a range of approaches to addressing this issue, including narrow legislative fixes in the telecommunications space that make it clear: neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation.

We also believe the Federal Communications Commission (FCC), with its responsibility for promoting mobile competition and innovation, has an important role to play here. FCC Chairman Genachowski today voiced his concern about mobile phone unlocking, and to complement his efforts, NTIA will be formally engaging with the FCC as it addresses this urgent issue.

Finally, we would encourage mobile providers to consider what steps they as businesses can take to ensure that their customers can fully reap the benefits and features they expect when purchasing their devices.

We look forward to continuing to work with Congress, the wireless and mobile phone industries, and most importantly you — the everyday consumers who stand to benefit from this greater flexibility — to ensure our laws keep pace with changing technology, protect the economic competitiveness that has led to such innovation in this space, and offer consumers the flexibility and freedoms they deserve.

In a similarly staunch yet meaningless statement, the FCC’s Chairman, Julius Genachowski, stated: “From a communications policy perspective, this raises serious competition and innovation concerns, and for wireless consumers, it doesn’t pass the common-sense test… 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.” To paraphrase his words, “Cell phones are important to the FCC, but it’s not really for our problem. Let the providers and consumers, i.e. the market, take action.” If only Adam Smith’s invisible hand had a cell phone we could call, text, or FaceTime.

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But seriously. This is a lot of ruckus about nothing. The FCC’s response was lackluster because that is all that was necessary. Market forces take care of pricing and demand concerns.

As hard as it is to believe, there was a time when the service, and not the phone itself, was of supreme importance. Originally, home telephones were owned by Bell Telephone Company and leased to the lucky (and affluent) homeowners who could afford them. Cellular phones were clunky and expensive. Phones became cheaper and somewhat commoditized. Then, to allow service providers and hardware manufacturers to differentiate themselves, glitzier phones were made. Then, phones with data. But, by this point, cellular phones became a staple, but computing handheld devices were quite expensive. To incentivize purchases, service providers discounted the manufacturers’ price and the iPhone generation was born. Now consumers want to own the phones – which they purchased at a discount because of the attached strings – outright.

Presidential intervention in this war for “freedom to get free stuff” is ridiculous and potentially counterproductive. If you would like to own your phone – or anything else for that matter – outright, then buy it outright.

Edelman wrote, “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.” But that is precisely the issue. Purchasers of heavily discounted cellular phones are bound by another obligation. Unlocked phones are available directly from both the manufacturers and service providers at the retail price. By purchasing them through a contract plan, consumers agree to be bound to that provider, although both Verizon Wireless and AT&T Wireless have expressed their willingness to unlock phones and discharge the consumers from this “other obligation” at the end of the contract term.

The present situation is materially different from one in which unlocked phones could not be obtained and where all phones were necessarily bound to one provider. Consumers may choose to contract (or not) with any service provider they so choose, including discount providers which incentivize or require the consumer to bring his or her own device. Consumers cannot have their cake and eat it too, getting both the benefit of discounted phones provided by larger service providers to incentivize consumers to choose their service and the benefit of discounted service providers.

I cannot imagine what the People will want next.

Disclaimer: The opinions espoused are for the purposes of argument only. The author does not endorse any statements texted, tweeted, posted, or blogged in this article.

 

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