NTIA to FCC: Unlock Those Phones!

Sister agency asks FCC to adopt a rule requiring carriers to unlock phones on a customer’s request.

We reported earlier this year on a decision by the Librarian of Congress that overnight made it illegal for consumers to unlock their cell phones – that is, to run software that lets the phone work with a different wireless carrier. The Librarian’s decision discourages customers from straying to a carrier’s competitor because doing so, if your phone is locked, usually means having to pay for a new one.

Almost everyone thought the anti-unlocking rule was a bad idea: the FCC chairman, the White House, 114,000 petition signers, and vast numbers of outraged bloggers. The only fans of the rule, it seems, are the Librarian himself and the wireless carriers that requested the change.

Now the National Telecommunications and Information Administration (NTIA), which represents the White House on spectrum-related matters, has filed a Petition for Rulemaking asking the FCC to adopt a rule that requires a carrier to unlock a phone (or tablet) at the customer’s request. The rule would apply even while the customer is under the usually mandatory contract that goes with buying the phone from the carrier at a discount. (Adoption of the rule might require the carriers to separate their phone-selling contracts from their service contracts, a step T-Mobile has already taken.) The rule would also apply if the customer has completed the contract or paid an “early termination fee” to end it prematurely.

NTIA argues the rule will increase competition among service providers, assist persons traveling outside their usual coverage area, promote the market for used phones and tablets, and encourage the donation of used phones and tables to charity.

One could ask why the White House went through NTIA, instead of just telling the FCC what to do. Most federal agencies, including NTIA, in fact report to the President. The FCC is different, though, having been created by Congress as an “independent agency.” The President appoints its Commissioners, with the advice and consent of the Senate, but otherwise has no control over the FCC’s actions. NTIA had to send in its petition just like we do for our clients.

One could also ask why NTIA filed its petition with the FCC, not with the Librarian of Congress, who is, after all, the source of the problem. His justification for phone locking arises from copyright law, not communications law. The problem is that NTIA did make its arguments to the Librarian, who went ahead anyway to issue the ruling that got everybody’s knickers bunched up. NTIA’s new petition is thus something of an end-around play, seeking to enlist the FCC (whose officials have already expressed sympathy for NTIA’s position) in an effort to bypass the effect of the Librarian’s decision.

According to NTIA, the FCC’s broad authority to regulate wireless carriers enables it to mandate phone unlocking. There is nothing in principle that stops different agencies (the Librarian and the FCC) from having authority under different statutes (the Copyright Act and the Communications Act) over the same behavior (unlocking cell phones) by the same parties (the wireless carriers). It will be interesting to see how the FCC views the scope of its own powers in this situation.

FCC and NTIA personnel routinely collaborate on matters relating to the radio spectrum, and indeed, NTIA was careful to frame its request as one coming under the FCC’s spectrum responsibilities. It is rare, though, for NTIA to involve itself in the business dealings of the FCC’s regulatees. It remains to be seen whether the wireless carriers will oppose the new rule, which is probably their initial impulse, or take the outrage to heart and go along gracefully with the change.

Even if the FCC ultimately sides with NTIA, don’t expect the predicted benefits any time soon. Rule changes typically take the FCC at least two years, and sometimes twice or even three times that. At this point, the FCC has not even agreed to open a proceeding in response to NTIA’s petition. Before any rules can be adopted, the FCC ordinarily would take comments and reply comments on the petition, and then issue a notice of proposed rulemaking, accept more comments and reply comments in response, and eventually issue a report and order. Still, it’s a reasonable assumption that a petition from NTIA may go through the process more quickly than a petition filed by most anybody else. We will keep you posted as the matter progresses.