Carriers Support Goodlatte Cellphone Unlocking Bill

The bill, authored by House Judiciary Committee Chairman Bob Goodlatte, R-Va., offers a legislative fix that would restore an exemption to the Digital Millennium Copyright Act (DMCA) for cellphone firmware unlocking that permits consumers to use their phones with other carriers once their contracts have expired. Under the DMCA those who unlock their phones without permission from their carriers may be subject to civil lawsuits, criminal fines or imprisonment. FCC and White House officials advocated for legislative fixes to give consumers more control over their devices, after the Copyright Office last year removed an exemption for cellphone firmware unlocking granted in previous triennial reviews of the 1998 law. HR-1123 would also direct the Copyright Office to determine whether similar treatment should be given to other wireless devices, like tablets.

Wireless carriers are “supportive of the bill and the way it was drafted,” said Altschul. “It returns the situation to the status quo.” There are legitimate reasons to permit carriers to lock consumers’ cellphones, he said. U.S. carriers incur tremendous costs to subsidize wireless devices and because phones are small and light they can “easily” shipped to countries where there are no discounts, he said. Furthermore, there is a “huge amount of street crime” where criminals target cellphones, he said, and if unlocking is permitted it would “legitimize the ability of brick and mortar stores to be the first step of the fencing operation.”

Barry called the bill a “positive, immediate fix” to the Librarian of Congress’s “unfortunate decision” and urged lawmakers to quickly pass the bill. “Unlocking is particularly important for rural, regional and smaller carriers that lack scale to gain access to the latest, most iconic devices from equipment manufacturers,” he said. “In an industry dominated by the largest two carriers, unlocking provides one small, but important, opportunity for competitive carriers to provide their innovative services and rate plans to consumers who wish to keep their originally purchased devices.”

Consumers Union Senior Policy Counsel George Slover also urged the panel to quickly pass the legislation. “Any way you look at it, this reversal on unlocking is a bad deal for consumers but a boon for providers, who lock consumers in to long-term bundled contracts, and manufacturers who see an artificially inflated demand for new devices through the forced retirement of perfectly good used phones,” said Slover. “If consumers could shop for the best deal on each of these purchases separately, they would get lower prices, improved quality, and greater innovation and variety.”

Rep. Jason Chaffetz, R-Utah, said he thought criminal penalties for consumers who unlock their cellphones “seems pretty severe.” Under current law, those who violate the DMCA provision regarding cellphone unlocking could face up to five years in jail and a $500,000 fine. Steven Metalitz, senior vice president of the International Intellectual Property Alliance and an attorney at Mitchell Silberberg, said there have been “virtually no prosecutions of the law” and the penalties only apply if someone is found to unlock phones “commercially and for financial gain.” Chaffetz responded that “that is a good reason to take it off the books.”

Rep. Zoe Lofgren, D-Calif., said Congress should seek a more comprehensive legislative remedy that would give consumers more freedom in the use of their cellphones. “I don’t think that using criminal law to enforce the contract is appropriate,” said Lofgren. “That is a misuse of the law. … It is not the Congress’s role to tell people the business model they should use. That is not our job, to say how the market should work.” In addition to sponsoring HR-1123, Lofgren is an author of the Unlocking Technology Act (HR-1892), which would clarify that consumers are permitted to circumvent the technological protection measures that prevent their handsets from being used with other networks. The bill is cosponsored by Reps. Thomas Massie, R-Ky.; Jared Polis, D-Colo.; and House Communications Subcommittee Ranking Member Anna Eshoo, D-Calif.

Goodlatte acknowledged that some people would prefer a longer exemption: “However, in the interest of helping consumers today and not running afoul of several of our nation’s Free Trade Agreements, HR-1123 reinstates an exemption for cell phone unlocking until the next rulemaking process,” according to prepared remarks. He said considering changes to the underlying statutory language of U.S. copyright law is “a question for another day.”