What would you do if cellphone unlocking were illegal?

This post explores a currently hypothetical situation in the Caribbean: what would you do if the unlocking mobile/cellular phones were illegal?

This past Wednesday, TechNewDaily, reported that after 26 January 2013, the unblocking of mobile/cellular phones would become illegal in the United States. The post was picked up by a number of reputable online publications, such as Mashable and MSN, but at the time of publishing this article, it does not appear that this news has been independently corroborated by another source. Nevertheless and as expected, the news report has generated a maelstrom of criticisms, should this imminent change be true.  However, it ought to cause us to wonder what would we do if such a ruling were implemented in the Caribbean, and what might be the deeper implications?

Would consumers be able to exercise choice?

Across the region, most mobile/cellular service operators sell their phones locked to their particular network. This applies for phones that are being used under both pre-paid and post paid plans. However, pre-paid subscribers are generally required to purchase their phone outright, and consequently own their phones from the outset.  Under most post-paid plans, the same applies, though there are instances where the full price of a phone is being recovered over the duration of the contract period, as can be the case for iPhones sold by LIME.

One of the perceived advantages of having competition in telecoms, is the freedom of choice that consumers would enjoy, and hence the ability vote with their feet as they see fit. However, as was noted in an earlier post, consumers enjoy freedom of choice of a service provider until they choose; thereafter they can be locked in indefinitely.

Based on our Snapshot: number portability in the Caribbean, most Caribbean countries either have implemented, or are in the process of implementing number portability. However, it has been taken for granted that should it be necessary, consumers’ existing phones would be unlocked, i.e. no longer restricted to be used on one particular carrier’s network, in order for them to be successfully transferred to another network.

Should device unlocking ever become illegal, it would have the power to thwart efforts towards number portability, and the boost to competition anticipated. More importantly, it would mean that consumers might not be able to fully enjoy all of the key benefits promised in competitive markets.

Local versus roaming charges

For those of us who travel regularly, or for extended periods of time, we can find ourselves in a situation where either, we cannot remain as connected as we would normally like, or we are left to settle huge phone bills upon our return home. Worldwide, roaming charges tend to be, in the order of multiples, more expensive than the rates payable in one’s home country. As a result, it is easy to rack up thousands of dollars worth of roaming charges in a relatively short time.

With an unlocked phone, you may be in a better position to manage roaming charges. Should your existing phone be compatible with the mobile/cellular technology that is being used, such as GSM, CDMA, it may be possible to successfully install and use a local SIM card. Hence instead of both incoming and outgoing calls, along with mobile Internet connectivity, incurring roaming charges, in addition to the established standard rates, usage would be charged at the local rates only.

Third party suppliers marginalised

The provision of mobile/cellular and ancillary services in most competitive markets has evolved from being completely focussed and controlled by the mobile/cellular network operators, to now include third party services providers and suppliers. One noticeable area that has developed is that for the sale, servicing and repair of mobile/cellular devices.

Although most mobile/cellular operators offer a selection of devices at various price points, choice can still be limited. Many of them are locked into agreements with device vendors, which means that unlike, third party device suppliers they might not be in a position to be as responsive to the needs of their customer base. However, it also means that there would be an opportunity that such businesses could satisfy, and they can either choose to be aligned with a particular telco, or to sell unlocked phones, allowing the purchaser greater flexibility.

In making the unlocking of mobile/cellular phones illegal, it would not only signal a re-focussing of attention back on the carriers, it could also undermine the role of the independent device supplier in the market. Hence there would be implications for those and other businesses that provide ancillary services and supplement the offerings available.

Power to the telco or the consumer?

Although seldom discussed there can be an uneasy tension between consumers and the telcos; both need each other, but the relationship can sometimes be quite adversarial. Generally, consumers can be of the view that they are getting the short end of the stick, and are not enjoying all of the benefits they had hoped for or had expected.

Should there ever be a ruling that the unlocking of mobile/cellular phones is illegal, and from the consumers’ perspective, it would indicate that there is a decided shift of power in favour of the telcos. It also raises serious questions about the rights of phone owners – specifically those who have paid for their phones in full – and the ways they control and use their devices.

Image credits: Stuart Miles/ FreeDigitalPhotos.net

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