Tech, Law, and the DMCA (Part I of II) – Unlocking Your Phone is Now Illegal

I love technology and the explosion of mobile tech in the last decade – it’s allowed users in the United States and around the world to completely change and enhance the way we communicate and run our day to day lives.  Availability of information empowering the American consumer.  Activism.  Giving users a voice.  And as much good as it’s brought, it’s also brought its own set of problems.  With every new service made available to the American public comes an additional way to screw the American public – be it another veiled method of control or a straight up financial jack.  Tech rivals make backroom deals while suing each other to take customer favorites off the market.  Some folks still pay a 7,000% upcharge for something as simple as sending or receiving a text message.  And now, while your mobile bills can top $150 a month based on your device and expanding data usage, the industry is still a cash-devouring beast that cannot be fed.  The end result?  American consumers paying more money for less control over devices they own, which on their own can cost upwards of $600 if not subsidized with a contract renewal or some other pricing scheme.

If you know me on Facebook or Twitter you would have seen me ranting this past Friday about a new law that went into effect this weekend affecting mobile tech, complete with pleas to the big three carriers Verizon Wireless, AT&T and T-Mobile.  The reason was some new legal developments that went into effect this past weekend.  According to the Librarian of Congress and the DMCA (Digital Millenium Copyright Act), unlocking your phone or mobile device is now against the law.

Yes, you read that correctly.  From now forward, if you unlock your phone, you have committed a Federal crime.  And I’ll repeat myself, because I feel this bears repeating: If you decide to unlock your phone – the one that you own, which you spent hundreds of dollars and hours of research to purchase, under the DMCA you are a criminal and punishable by the law.

I’m going to try and split this up because I’m throwing a lot of information at you.  For those of you that don’t want to read through this entire thing and get right to the brass tacks, skip ahead to the “How this can affect you” section.

The Digital Millennium Copyright Act and Exemptions

The DMCA was established in 1998 to criminalize the creation and distribution of any technology that could bypass digital rights management systems implemented in various forms of media, as well as the people who use or host those technologies.  Stuff like software key generators, hardware hacks and modded game consoles fall under this.  The way it’s set up, the power to name exemptions to DMCA enforcement rests with one person, the Librarian of Congress.  These exemptions have a shelf life of three years, at which time the group requesting the exemption must re-lobby and re-convince Congress to keep that exemption in place.  It’s that arbitrary system that is causing this headache now.  Back in October, the recent list of exemptions was released, and included an extremely convoluted list of what’s exempt and what’s not involving your mobile tech.  Now the way it stands for the next three years:

On cell phones purchased in January 2013 or after, jailbreaking is acceptable, but unlocking is not.  That OK for jailbreaking, however, does not extend to your tablet.  So if you want to do the same to your iPad, you’re out of luck.  These rules come with some very specific language – saying that the phone has to be “originally acquired from the operator of a wireless telecommunications network or retailer no later than ninety days after the effective date of this exemption.”  What this means is that on your current phones, purchased in December 2012 or earlier, can still be unlocked without penalty.  But if you want to unlock something you bought this month or later, you can do no such thing without your carrier’s permission.  The Librarian set this up in October, but was nice enough to give people a 90 day grace period until January 2013 so people could buy phones they planned to unlock later.  But that time’s over now, kids.

I just don’t see the authority here.  What the hell does this have to do with piracy and copyright infringement?  Kind of reaching, Mr. Librarian.

Jailbreaking vs Unlocking

While these two terms may sound like the same thing, they’re actually quite different.  Jailbreaking a device means that it has the capability to download 3rd party apps not sold or released by the manufacturer.  This phrase became popular with the iPhone, where users would jailbreak their devices to download apps not purchased from Apple’s App Store.  Unlocking a device means that you remove the software that locks a device to a specific carrier.  For example, if I wanted to use an AT&T device on Verizon Wireless, then that device would have to be unlocked to allow me to do so.  So you can see how carriers would love keeping those locks down, so they can keep you right where you are.  Phone carriers offer subsidies on contract renewals so they can make up that difference over a 1 year or two year contract (similar to a loss leader kind of sale).  With data heavy customers, they make that back in about 2-4 months of a contract.  Unlocking your phone and jumping ship, even after paying a huge termination fee, still loses them some profit.  Not really money, but profit.

We’ve Played by Your Rules

Termination fees.  Yeah.  If the above described action happens, I owe my carrier up to $350 in the form of a termination fee.  I can’t refute that, it’s in my contract that I agreed to.  So there’s already a mechanism in place to protect the carrier from little ol’ me.  Without Federal law.  Just throwin’ that out there.

How this Affects Users

For a lot of people this probably isn’t going to be a big deal as far as how they use their devices because they don’t jailbreak or unlock them.  But there’s an increasing number of people that do.  Even if you don’t do anything like this with your devices though, it’s still something to pay attention to because this new set of exemptions affects us all in a number of ways.  On a fundamental level, this move is a strike against digital freedom and sets exactly what degree we actually own the tech we think we do.  If I buy a house I can paint the walls any color I want to.  When I buy a car I’m not restricted to what kind of gasoline I can use.  And when I buy a PC, there’s no rule that says that I can’t replace my OS.  But now if I buy a cell phone, my actions with it are now somehow up to the Librarian of Congress.

And part of that is thanks to the 2010 court case Vernor v. Autodesk, where  it was decided that we own our phones, just not the software that sits on it.

Financially is where the impact will be felt a little more heavily.  With the legal inability to unlock your own phone, if you want an unlocked phone you’ll have to buy one unsubsidized at full price.  For example last year when I bought my Droid Razr MAXX, I got it at a significantly discounted cost (i think it was $299) because I was renewing my Verizon Wireless contract at the time and reaped the benefit of VZW subsidizing my purchase.  Now if I want to buy a phone of the same grade but have it unlocked, I would have to shell out somewhere in the neighborhood of $650 and up for that device.  For those that were unaware, yes, that’s how much good smartphones cost on their own these days.

Travelers can also face some issues.  Someone with an unlocked phone can take it global, and just switch SIM cards at each destination to be able to use their own device.  This kind of convenience just became a lot more expensive.

Users can still buy phones that are already unlocked from their carriers, but it might cost them a pretty penny.  Some devices, like the iPhone 5 and Google’s Nexus 4, come unlocked out of the box, which is OK under the new law, and under certain situations the carrier will unlock a device for you, but don’t expect them to just go along with it.  Either way, the bottom line is that carriers win, and users lose.

So what are these consequences one would face should they choose to unlock their phone?  The CTIA has been kind enough to outline them for us on their official blog.  They, and subsequently the carriers, are the biggest beneficiaries of this whole mess:

“The penalties for unlocking a subsidized wireless phone without carrier consent can be severe. Civil penalties are based on the carrier’s actual damages and any additional profits of the violator, or a court can award statutory damages of not less than $200 or more than $2,500 per individual act. Criminal penalties are even more severe: any person convicted of violating section 1201 willfully and for purposes of commercial advantage or private financial gain (1) shall be fined not more than $500,000 or imprisoned for not more than 5 years, or both, for the first offense; and (2) shall be fined not more than $1,000,000 or imprisoned for not more than 10 years, or both, for any subsequent offense.”

This is of course by no means an exhaustive analysis of the situation – there’s a number of factors involved.  There’s another part of this exemption list that involves DVD/blu-ray media and your mobile devices, and I’ll cover that in part II.

Tushar Nene
Staff Writer
@tusharnene