Switching phone companies may get a lot less frustrating

If you’ve ever tried to switch your phone carrier, but found that the phone that you paid for has been locked by your previous phone provider, you may find comfort in knowing that those days may soon be over.

The Federal Communications Commission is looking to put an end to the controversial practice that’s been adopted by many phone providers with a new proposal that limits their power over consumers’ phones.

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Currently, some mobile phones have software installed in them that prevent consumers from using them with different phone carriers, essentially “locking” the phone, regardless if the network is technologically compatible with the device or not. Users can have their phones unlocked, but different phone providers have different rules on how that can be done, some require for certain conditions to be met before they can have their phone unlocked.

For example, according to the FCC, it is currently legal for providers to refuse to unlock phones for former customers who are not in “good standing” or have not fulfilled their “service contract, device financing plan, or paid the applicable early termination fee.”

Under FCC’s proposal, all mobile phone providers would be required to unlock cell phones 60 days after they’ve been activated.

“Real competition benefits from transparency and consistency,” FCC chairwoman Jessica Rosenworcel said in a statement. “That is why we are proposing clear, nationwide mobile phone unlocking rules. When you buy a phone, you should have the freedom to decide when to change service to the carrier you want and not have the device you own stuck by practices that prevent you from making that choice.”

App icons displayed on iPhone 15 Pro screen are seen in this illustration photo at the store in Krakow, Poland on October 31, 2023.

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Rosenworcel claims that the proposal would increase competition between phone service providers as consumers would have more choices. She also said that it would decrease the costs consumers have to face when switching providers. The proposal would reduce overall confusion as the same rules on unlocking would apply to all cell phone carriers.

The proposal will face a first vote at a July 18 open meeting. The FCC will seek comment on whether the rule should be applied to existing or future contracts. It will also seek input on the impact the rule would have on the discounts and incentives carriers offer for certain phone plans, and how small business and resellers would be affected by the increased number of phones on the secondary market.

The FCC move comes after several public interest groups in February called on the Commission to develop a phone unlocking rule after T-Mobile announced its acquisition of Mint Mobile last year.

Verizon opposes the FCC’s phone unlocking proposal

However, Verizon  (VZ) , which follows a requirement to unlock phones after 60 days due to a previous acquisition, pushed back against the idea of developing a phone unlocking rule. In a filing to the FCC in March, Verizon claims that an unlocking rule can have a negative effect on phone discounts.

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“Requiring carriers to unlock their mobile wireless devices – which often contain software that prevents them from operating on another carrier’s network – allows consumers to switch providers more easily,” Verizon’s filing said. “At the same time, however, an unlocking requirement may discourage a carrier from deeply discounting a phone because it cannot recoup its subsidy if a customer immediately moves to another carrier.”

Verizon also claims in the filing that the rule could have “complex tradeoffs and consequences for consumers and carriers,” and that it is not clear that it would benefit customers.

“Providers rely on device locks to sustain their ability to offer such subsidies,” said Verizon. “Device locking periods, in fact, may greatly benefit low-income consumers because they make devices more affordable, lowering the barrier to entry to mobile service.” 

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