Congress Takes Action to Allow Unlocking of Mobile Phones | White & Case LLP International Law Firm, Global Law Practice
Congress Takes Action to Allow Unlocking of Mobile Phones

Congress Takes Action to Allow Unlocking of Mobile Phones

White & Case Technology Newsflash

With criticism of a recent U.S. Copyright Office rulemaking growing, members of Congress have introduced legislation to allow consumers to unlock and use mobile phones on wireless networks of their choice. If enacted, legislation could have important consequences for the wireless carrier industry and the public.

The Copyright Office DMCA Rulemaking
The Digital Millennium Copyright Act ("DMCA") prohibits the circumvention of technological measures that effectively control access to copyrighted works.[1] However, as a "safety valve," Congress authorized the Copyright Office to exempt from the statute certain classes of works to allow users to make noninfringing uses.[2] The Copyright Office conducts a rulemaking every three years to determine which classes of works are exempt, and since 2006 it has exempted the unlocking of mobile phones.

The Copyright Office ended the exemption in October 2012.[3] It found persuasive the arguments offered by the CTIA, a trade association of commercial wireless service providers, which took the position that the exemption was unnecessary because major nationwide carriers have liberal policies for unlocking phones, unlocked phones are freely available from third parties, and the ability to keep mobile phones locked was essential to the industry's business model.[4] According to the CITA, wireless carriers subsidize a portion of the cost of mobile phones in exchange for multi-year service contracts – a model that allows consumers to purchase advanced handset devices relatively cheaply and carriers to recoup their subsidy.

As a result of the Copyright Office rulemaking, consumers no longer are allowed to unlock newly purchased mobile phones and use them on different wireless networks without permission from the carriers. Under the statute, violators face penalties of up to five years in prison and a $500,000 fine.[5] The Copyright Office left in place a limited exemption for used or previously purchased "legacy" phones.

Public Reaction and Proposed Legislation
The rulemaking sparked an immediate public outcry. Proponents of the exemption argued it is crucial to protect consumers and guarantee a competitive marketplace, and that eliminating the exemption will result in higher device prices and widespread, unwanted mobile customer "lock-in."[6]

Soon after the rulemaking, more than 100,000 individuals signed an online "We the People" petition to the White House requesting that the Administration ask the Librarian of Congress to rescind the decision or to promote a bill that permanently makes unlocking legal. The White House itself has no authority to reverse the rulemaking, as the Copyright Office sits within the Library of Congress, an agency of the U.S. Congress, but the White House responded to the petition by offering support for "narrow legislative fixes" to make clear that "neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation."[7]

In recent weeks, members of Congress from both parties have introduced legislation to allow the unlocking of mobile phones. These bills take several different approaches.

One approach, offered by Sen. Ron Wyden (D-Ore.), would amend the DMCA to permanently allow mobile phone unlocking.[8] In a similar vein, Sens. Amy J. Klobuchar (D-Minn.), Mike Lee (R-Utah), and Richard Blumenthal (D-Conn.) introduced a bill that would require the Federal Communications Commission to mandate that mobile data service providers permit subscribers to unlock their devices.[9]

A more limited approach is being offered by Sen. Patrick Leahy (D-Vt.), Rep. Bob Goodlatte (R-Va.), and Rep. John Conyers (D-Mich.). Their bills would overturn the Copyright Office rulemaking and allow it to issue future rulings on the exemption, rather than to create a permanent right to unlocked mobile phones.[10] Reps. Darrell E. Issa (R-Calif.), Jason E. Chaffetz (R-Utah), and Jared S. Polis (D-Colo.) also publicly announced their intentions to introduce legislation.

Given the Administration's support and the strong bipartisan push in Congress, some form of legislation appears likely. Whatever policy ultimately emerges could have a lasting impact on mobile phone carriers, their business model, and consumers.

 

[1] - See 17 U.S.C. §1201(a)(1)(A).
[2] - See 17 U.S.C. § 1201(a)(1)(B).
[3] - See Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 77 Fed. Reg. 65260 (Oct. 26, 2012).
[4] - Id. at 65265.
[5] - See 17 U.S.C. § 1204.
[6] - Id.
[7] - R. David Edelman, It's Time to Legalize Cell Phone Unlocking, Official White House Response, https://petitions.whitehouse.gov/petition/make-unlocking-cell-phones-legal/1g9KhZG7 (last visited Mar. 14, 2013)
[8] - See Wireless Device Independence Act of 2013, S. 467, 113th Congress (2013).
[9] - See Wireless Consumer Choice Act , S. 481, 113th Congress (2013).
[10] - See Unlocking Consumer Choice and Wireless Competition Act, S. 517, 113th Congress (2013); To promote consumer choice and wireless competition by permitting consumers to unlock mobile wireless devices, and for other purposes, H.R. 1123, 113th Congress (2013).

 

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