Smartphone owners, cast off your chains. Your beloved iPhone, your cherished Galaxy, your esteemed Lumia is no longer bound to one carrier forever. Earlier, this month it became legal to unlock your mobile phone--President Obama's signature says so--ushering in a new era of more competition, as customers can easily switch carriers. Say goodbye to exorbitant roaming fees when you travel abroad. Say hello to greater freedom for selling that old, unused smartphone that's no longer linked to a lone carrier for life. And get ready for more choice, as competing carriers win our allegiance through all manner of innovative service offerings.
There's just one problem. Reality does not match the hype--at least, not yet.
In the short-term, "the new law won't actually make much difference," said Jan Dawson, chief analyst at Jackdaw Research when I called to ask him what we can expect from this brave new world of phone unlocking.
But don't despair. Over the long term, the new unlocking law is likely to deliver all the benefits promised.
Here's how we got to where we are now with phone unlocking, and what changes you can expect now that there's a new law in place.
What is phone unlocking?
Phones are tied, typically via a software lock, to work on only one carrier's network. That iPhone you got through AT&T, for example, is locked into that carrier's network. Unlocking the phone means you've altered the settings on your smartphone (or even an old-school feature phone) so that it can be used on a different wireless network.
Wait--it was illegal to unlock your phone?
Yes. The 1998 Digital Millennium Copyright Act (DMCA) prohibits Americans from "circumventing" technologies that protect copyrighted works, such as your iTunes catalog on your iPhone. The DMCA allows the Library of Congress to exempt certain technologies from this prohibition. In the past, the Library of Congress has exempted mobile phones. In late 2012, however, the Library of Congress didn't renew the exemption, effectively making phone unlocking illegal.
This led to a petition calling for unlocking to be legalized. More than 100,000 people signed it, the White House signalled its support, and Congress passed the law signed by the president earlier this month. Score one for the crowd!
So I can legally unlock my phone now?
Yes. Assuming it really is your phone. By which I mean, if you purchased a Samsung Galaxy S4 under a two-year contract with Verizon, and you've got a few months before that contract is up, then the carrier is (still) under no obligation to unlock that device. You technically do not own it.
There's another catch. The new law essentially just requires the Library of Congress to restore its earlier unlocking exemption. The exemption itself is still not permanent. Rather, the Library of Congress must decide once again in 2015 whether to renew the exemption. That said, this new law plus market pressure are likely to make phone unlocking a de facto permanent feature of the U.S. wireless marketplace.
Can I take my unlocked phone to another carrier?
Absolutely. But, know that there will be pain. That's especially true if you're not using the very latest smartphones.
"Most U.S. carriers use different combinations of technologies and [radio] frequencies," Avi Greengart, research director for Current Analysis, told me. Take your "fully unlocked" AT&T phone to Sprint, for example, and "the phone simply won't work."
Here's why: AT&T and T-Mobile both use GSM, the same wireless standard used throughout much of the world. Thus, it's extremely easy to switch from AT&T to T-Mobile, for example, at least for newer phones. Just swap SIM cards from the old carrier to the new. However, Verizon and Sprint use the CDMA network standard. CDMA does not use a SIM card. You can't take your unlocked phone from AT&T and get a Verizon SIM and start talking.
"If all this sounds complicated, it is, and that is a result of technical choices, not carrier malfeasance," Greengart said. These choices include the different network technologies as well as different radio frequencies used to deliver voice, text, and data services. Fortunately, the four major U.S. wireless carriers are all rolling out 4G using the same LTE technology that most of the world's larger mobile carriers are using. As that rollout continues and as newer phones such as iPhone 5s support the numerous radio frequency bands each carrier uses, switching will become far less painful and likely far more commonplace. For now, though, unlocked does not necessarily mean interoperable.
How does phone unlocking benefit me?
An unlocked phone should save you significant carrier roaming charges while traveling abroad. With an unlocked iPhone 5s, for example, you need only buy a pre-paid SIM card, readily available on Amazon or in shops throughout Europe and Asia. Pop in the SIM, and you're now on the local network.
The unlocking law makes it easier to sell your old phone. Say you've got a Galaxy S3 from AT&T just laying about, gathering dust. You can now sell it to someone who can have it unlocked and use it on AT&T or T-Mobile. Ultimately, more carrier options should make your second-hand phone more appealing to more buyers. And, thanks to the law of supply and demand, you might be able to command a better resale price.
How does phone unlocking benefit all consumers?
As more phones are unlocked, and as it becomes easier to switch carriers, we could see a rather significant increase in the availability of low-cost, second-hand phones. With a greater number of older phones getting re-sold, phone unlocking could also reduce the number of devices that are simply tossed out. And in time, all consumers will be able to take advantage of the best deals, avoid nasty roaming fees, and more easily sell their old devices.
Is unlocking your phone the same as jailbreaking?
No. When you jailbreak your smartphone, you're extricating it from the restrictions of a specific mobile platform. iPhone owners can "jailbreak" their device, allowing them to then buy apps outside of Apple's App Store, load non-approved software, and tweak certain features. That's not the same as using the device on any carrier. (Jailbreaking also carries some risks to go with the increased freedom to put whatever you want on your phone--but that's another article altogether.
Will carriers fight this new law?
Unlikely. Late last year, the major carriers reached an agreement with the FCC to allow unlocking and make it a more transparent process. Other regulations have also made unlocking a more common occurrence. For example, Verizon keeps the GSM and LTE bands on its LTE phones unlocked. The carrier isn't doing this out of the kindness of its heart, as Greengart reminded me. Rather, it's Verizon "complying with strict interpretations of the Federal 700 MHz auction it won a few years back." Those federal auction rules were enacted to allow devices from other carriers to operate on Verizon. Unfortunately, since many devices only support higher-speed LTE service on specific frequency bands, the practical benefit was negligible because consumers were not be able to take advantage of Verizon's LTE on their preferred device. Fortunately, this is all changing, if slowly.
Unlocking is the future. It's unlikely the industry will take a tough stand on this. Consumers may not benefit from phone unlocking immediately, but the new law should expand choice, encourage service innovation across the industry, and likely grow revenues. And that's a win-win proposition.