Telecom companies sell smartphones at drastically lower prices than manufacturers and retailers. In return, they put software in those phones that prevent you from switching to another provider until the contractual obligations are met. Usually, you are required to stay with a carrier until your device has been paid off.
In short, you are beholden to a carrier because of the discount they offer on a new phone. From a carrier’s perspective, phone locks allow them to recoup the cost of the device through bills.
The FCC believes that customers should have the freedom to choose a provider who is providing the best value. The Commission wants to enforce a uniform 60-day unlocking policy to bolster competition and reward innovation.
Carriers like T-Mobile discount cutting-edge devices heavily but lock customers to their network in return. | Image Credit – T-Mobile
T-Mobile says that the rule would force carriers to slash the discounts offered on new handsets, impacting customers. The carrier believes its prepaid customers would see discounts reduced by 40 to 70 percent for devices from Apple, Samsung, and Motorola.
The company also warns that an unlocking policy would “leave providers little choice but to limit their handset offers to lower cost and often lesser performing handsets.”
Verizon is already required to unlock phones after 60 days as a condition of its TracFone purchase and 700MHz spectrum acquisition in 2021.
The FCC will have to tread carefully as the smartphone market is only now recovering from the pandemic and lower carrier subsidies could put the industry in a funk again.
