As of 2003, consumers have had the right to change providers while keeping their wireless number. Since 2007, consumers have also had the right to “unlock” their wireless device. But the Librarian of Congress recently eliminated consumers’ right to use their own device after their contract expires.
It is now up to Congress to protect our right to use our phones as we choose.
Unlocking is a simple technique by which a software patch allows a phone to use SIM cards from a different carrier. This technology, while acknowledged by market experts as beneficial and lawful in other countries, is now illegal for Americans. This agency’s ruling hurts consumers, stifles innovation and makes millions of average Americans guilty of a felony punishable by 5 years in prison and a $500,000 fine.
Overall, it’s a classic example of crony capitalism, where a few dominant companies with significant lobbying assets change the law for their own benefit, thereby creating higher barriers to entry for their competitors.
At the time, even the Commerce Department had recommended allowing unlocking because the technology benefits businesses and the consumer. But the regulator, the Librarian of Congress, decided in favor of the mobile carriers, and decided to ban this widely used technology.
When the Librarian’s ruling made unlocking illegal, the digital generation responded with a White House petition. Within a month, 114,000 people signed the White House petition, created by Sina Khanifar, to reverse this incredible ruling.
Within days there was swift action. On February 28, 2013, the FCC announced an investigation and on March 4 the White House formally reversed their position and endorsed unlocking. FCC Commissioner Ajit Pai became an outspoken advocate of restoring the free market to the mobile industry, calling for a simple solution: permanently legalizing cellphone unlocking for businesses to sell and consumers to use – exactly the premise of our mass campaign:
“It’s not complicated,” as Commissioner Pai said. Let’s go back to the free market. “Let’s allow contract law — not copyright or criminal law — to govern the relationship between consumers and wireless carriers. In a free market, once a consumer’s contract expires, she should be able to take her device to another carrier. The government shouldn’t tilt the scales with legal penalties; it should leave the mobile marketplace alone.”
As Commissioner Pai has mentioned, “it’s absurd that we’re even discussing this issue. How did we get to the point where a consumer could be criminally prosecuted for unlocking his cellphone?”
The White House and FCC’s endorsement cascaded into support from outside groups on the left and right including Freedomworks, R Street, Tea Party Nation, Young Americans for Liberty, National College Republicans, Public Knowledge, Electronic Freedom Foundation, Consumers Advocacy, the Competitive Carriers Association, Free Press, and scholars from the Mercatus Center and the Competitive Enterprise Institute.
And, eventually, Congress acted.
Within a month of the Librarian’s decision going into effect, no group could be found that was publicly in favor of the ruling, even those that lobbied for it — it had become politically toxic. Rarely has a mass movement caused such a substantial change in policy so quickly and rarely has a mass movement had such bipartisan support. Multiple bills were introduced and on August 1st, the House Judiciary Committee approved Chairman Bob Goodlatte’s unlocking legislation.
This legislation, as amended, is a win for innovators, the free market and the consumer. As I mentioned in my Judiciary Committee testimony:
“Banning technologies is an extreme step by government, a truly incredible reach of Federal power. . . I would petition this body to be [careful in delegating] the authority of what technologies to ban to a quasi-regulatory agent when, in these and many other circumstances, there is no compelling governmental interest.”
The unlocking campaign represents the continuation of the digital activism and reform efforts that killed SOPA/PIPA. This campaign demonstrates that the American people will respond to real reforms that are pro-market, pro-innovation, pro-liberty, pro-consumer, and pro-internet freedom.
This critical issue affects the future of the wireless market, which is why many have called fixing this issue “the most important change in mobile policy in nine years.” The legislation’s final passage will restore competition to the mobile market, leading to more innovation and lower prices for consumers.
Unfortunately, the prohibition against unlocking has already hurt the market. Here is an anecdote from the entrepreneur who started the White House petition Sina Khanifar:
“I started unlocking phones after a typical entrepreneurial experience … my website became a success … It was then that I received Motorola’s cease and desist letter. It claimed [I was liable for up to] $500,000 in fines and five years in jail per offense. I was 20 years old and terrified; my immediate reaction was to shut down the business.”
And Kyle Wiens (the CEO of Ifixit):
“iFixit, is a free, open-source repair manual for everything, including cell phones. [The unlocking prohibition] has a material impact on our business, preventing us from helping people start businesses to unlock and repurpose cell phones…”
The general public deserves better than cronyism making millions of Americans felons for using perfectly ordinary technologies – they deserve a free market.
Unlocking is not the only technology that has been banned despite having uses that are above board. Among the other affected technologies are read-aloud functionality (that helps 21.2 million blind Americans), closed-captioning functionality (that helps 40 million deaf Americans), technology to back-up DVD/Blu-Rays users have legally purchased to their PC, and jailbreaking tablets (there are an estimated 23 million jailbroken iOS devices). All these technologies that have at some purposes that are not infringing, and indeed have nothing to do with copyright, should be made lawful permanently.
Chairman Goodlatte’s legislation (H.R. 1123) addresses the short term problems with unlocking alone, but then – incredibly – it gives power back to the Librarian to rule all over again. Handing power back to the regulator is not a solution. As Ajit Pai explains:
“Let’s fix this problem permanently. We don’t need to have the exact same debate every three years, like an extended version of the movie Groundhog Day. I can assure you that the case for criminalizing cellphone unlocking isn’t going to get any stronger with time.”
Congress ought to vote without delay on H.R. 1123, as a short term measure, and then get to work on the permanent solution. Businesses need certainty, and kicking the can back to the Librarian of Congress is to be complicit in the rampant growth of the administrative state that threatens our economy and freedom.
Another piece of legislation introduced by Reps. Lofgren, Massie, Eshoo and Polis (H.R. 1892) deals with the unlocking problem permanently and also legalizes other beneficial pro-competitive technologies. H.R. 1892 has already been endorsed by FreedomWorks and R Street and is the true conservative solution: it restores the free market, provides legal certainty, and helps deal with the larger problem of federal over-criminalization.
Congress must act without delay. Every day that Congress fails to act, our service members get sent abroad and have to choose between breaking the law to unlock their phone, or not using their devices, millions of Americans commit felonies punishable by 5 years in prison and a $500,000 fines, international travelers pay higher prices for using their phones abroad, and we continue to inhibit the free market and harm competition which ultimately drives up costs for all consumers.
Contact your member of Congress and ask them, Why does Congress delegate these decisions to a quasi-regulatory agent? Isn’t it time to put the Librarian of Congress back to his task of managing the nation’s preeminent library rather than deciding what technologies to ban?