The US would join only a handful of other countries that have pursued a ban on SIM locking to encourage greater competition at the retail level
The FCC is considering requiring operators to unlock all mobile phones within 60 days of activation
On 27 June 2024, the Federal Communications Commission (FCC) proposed a new rule to regulate the sale of locked mobile phones. The rule would require mobile operators in the US to unlock consumers’ new phones within 60 days of activation. In her announcement, FCC Chairwoman Jessica Rosenworcel noted that the rule was intended to create a clear and uniform standard for all mobile providers and to better support consumers seeking to switch providers. The rule will be formally considered at the FCC’s open meeting on 18 July 2024, after which it will become subject to a public consultation. This added protection for consumers is particularly notable considering that the act of unlocking a phone outside of an operator’s contract terms, often referred to as hacking or “jailbreaking” a phone, was a criminal offence under US copyright law until 2014.
While some industry standards exist on SIM locking, terms for unlocking still vary greatly between US operators
In the US, mobile operators are largely unregulated in setting the terms for unlocking a consumer’s phone. Under a set of 2014 commitments from the CTIA (the trade body for the US mobile industry), network operators agreed to a standard of transparency for communicating phone unlocking policies with consumers and adopted a position on unlocking phones for consumers in “good standing”. However, as a result of the lack of regulation, most unlocking terms vary greatly between networks, including how long after activation before a phone can be unlocked and whether the consumer needs to actively request their phone be unlocked. For contracted mobile customers, phones are typically eligible for unlocking at the end of the first contract term, at which point the value of the phone has been recouped across instalment payments or has been paid off through a lump-sum early termination fee. For prepaid customers, the CTIA standard set a voluntary timeline of one year for unlocking. Though the FCC also noted that it believed its proposed rule would improve competition, the regulator stated it would specifically seek feedback on the incentives for discounted phone offerings, as well as implications for smaller operators, new entrants and phone resellers.
Bans on phone locking are a relatively rare tool used by regulators to improve outcomes for consumers
Prohibitions on phone or SIM locking are a relatively rare but still an increasingly popular consumer protection measure adopted by global regulators in recent years. The Canadian Radio-television and Telecommunications Commission (CRTC) Wireless Code of Conduct added a ban on the sale of locked phones in 2017. A similar law to ban SIM locking was passed in Japan in 2019 as well, after nearly a decade of pressure on major mobile operators to decouple charges for connectivity and devices. In the UK, Ofcom issued a ban on the sale of locked mobile phones in December 2021. While phone locking regulation varies from country to country, including between EU Member States, the European Electronic Communications Code (EECC) does contain provisions on a consumers’ right to contract transparency, ease of switching and the bundling of products – e.g. mobile services with devices – which together could limit the already relatively uncommon practice of locking SIMs in the bloc. Banning phone locking, however, remains just one of a number of the consumer-oriented intervention regulators have pursued in recent years, including policies around facilitating switching between operators.
