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Sprint fallout may lead to easier unlocks

updated 02:30 pm EDT, Fri October 26, 2007

Sprint Unlock Suit Fallout

Sprint has settled a class action lawsuit whose result may force it and other phone carriers to relent and allow phone unlocking, according to an update by Ars Technica. The complaint, filed by California residents Linda and William Mackenzie as well as Gerasimo Molfetas and Katherine Zill, argues that Sprint has broken the state's Unfair Competition Law and related laws by refusing to unlock phones for customers who wanted to switch providers. As part of the settlement, Sprint will be required to give customers an unlock code for their phone when they choose to switch carriers. The policy change will be retroactive to 1999 and will require that both new agreements and customer service agents publicize the details, according to the terms.

While the company will not be formally liable for past behavior, the settlement may set an informal precedent for other carriers operating in California and force a similar outcome. AT&T has recently become the subject of two iPhone-related lawsuits that accuse it and Apple of deliberately barring the handset from use with alternate carriers or with non-approved SIM cards. T-Mobile is also the target of a lawsuit over similar restrictions.

Carriers have previously argued that such locks are beneficial to users by allowing the companies to reduce the prices of phones or plans, knowing that customers will pay a minimum amount rather than assuming customers might leave at any given time.



By Electronista Staff
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  1. bobolicious

    Dedicated MacNNer

    Joined: Aug 2002

    0

    Allellullia...

    ...I understand the need to stabilize revenues to fund capital investments in hardware, however forcing everyone into a service or carrier they may not want or be able to use to build the business would indeed seem beyond such a goal...

  1. climacs

    Forum Regular

    Joined: Sep 2001

    0

    *shrug*

    if people don't like being locked, buy an unlocked phone! It's not like you don't have options.

    I am unclear as to what this suit referred to. Was Sprint refusing to unlock phones, no matter what? Even after a contract term was completed? That would indeed be unfair... if I complete my contract term, then I got what I wanted (a cheap, subsidized phone) and Sprint got what they wanted (guaranteed two years of my business). It's my phone and they should unlock it.

    AT+T agreed to invest in upgrading its network in return for a guaranteed exclusivity deal with Apple. No exclusivity, no capital investment. I don't see what's so unreasonable about that. If you find the terms onerous (as I do)... don't buy an iPhone until you are not required to be shotgun-wedded to AT+T!

  1. Guest

    Fresh-Faced Recruit

    Joined: Nov 1999

    0

    There is a difference...

    The iPhone is advertised, and promoted as a non-subsidized phone. For subsidized phones, you sign a contract with the carrier for X years, and they give you the phone AFTER you sign the contract. With the iPhone, you buy it at full retail price, THEN you either can enter into a 2 year contract OR go on a month to month plan. This could mean that AT&T/Apple would need to provide unlock codes immediately, rather than after 2 years.

  1. Paco01

    Fresh-Faced Recruit

    Joined: Apr 2007

    0

    Advertised, promoted?

    Where did Apple mention that the iPhone was a non-subsidized phone? On all advertisements I've seen they always mentioned the AT&T deal.

    Quote from the Apple Store website: "To use iPhone, you’ll need to sign up for a 2-year service agreement." I think that's clear enough.

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    0

    Heavy subsidy

    Actually, the heaviest subsidy in the mobile phone business today is paid by AT&T and it is for the iPhone. Without that subsidy, the device would cost somewhere around $750. The only difference is, unlike virtually all other handset makers that pass the subsidy onto consumers, Apple is keeping the money.

    Gene Munster, Apple analyst, reported yesterday that kickbacks Apple is getting for every iPhone are at $18 per month ($432), plus some $250 AT&T pays them upfront for a new subscriber. These are gargantuan subsidies. Apple has built their phone price around these numbers. That's why it was able to slash price by a third and not even blink.

  1. TheSnarkmeister

    Fresh-Faced Recruit

    Joined: Jun 2007

    0

    That was then, this is...

    "Carriers have previously argued that such locks are beneficial to users by allowing the companies to reduce the prices of phones or plans"...

    Except that the iPhone, which is unsubsidized and still requires a contract, provides evidence that the subsidy arguement has been facetious all along. TechSwot.com wrote about this the week before the iPhone was released. As near as I can tell, not a single mainstream Mac media outlet, or consumer organization, covered the issue at the time. They were all too caught up in iPhone hype to actually use their brains. Anyone familiar with telcom law should have seen this coming. (And aren't journalist paid to be familiar with the laws affecting their target industries?)

    Here we are four months later and they are just starting to catch up. Was it because they were too concerned about flood of iPhone-related advertising revenue to actually do any critical thinking or investigative journalism?

  1. TheSnarkmeister

    Fresh-Faced Recruit

    Joined: Jun 2007

    0

    It is hard..

    It is hard not to observe that many Americans seem to have extreme difficulty with even the most basic of critical thinking tasks. For instance, a "kickback" is not a "subsidy." (Especially not when it implies a financial arrangement to enable evasion of Federal law in the form of the MDCA.)

  1. elroth

    Junior Member

    Joined: Jul 2006

    0

    snark wrong

    Check out the deal in France. People can buy the iPhone at a comparable price (I think 399 euros) with a 2-year contract, or for quite a bit more money (not yet defined but rumoured to be 899 euros) with no service contract. And that's what will happen in the U.S. if Apple has to sell unlocked phones.

    The only reason you say the iPhone is "unsubsidized" is because it's not available unlocked. But it is subsidized by AT&T, just in a different way than other phones. Instead of paying LG or Motorola a set amount for each phone a customer buys (at a reduced price), AT&T gives Apple a piece of the monthly charges. It's just a different kind of subsidy.

    And the fact that the iPhone is available directly from Apple doesn't change anything, because it is locked to AT&T. It's just a new distribution model. Apple sells it for the same cheap price, and gets the same subsidy from AT&T.

  1. bluejammm

    Fresh-Faced Recruit

    Joined: Jul 2006

    0

    subsidy my a$$

    There aren't ANY cell phones that I have seen that retail for much less than $200. That's for the cheaper ones. The prices are completely rediculous and way overbloated to make people feel like they are getting a deal by signing a long agreement. Cell phone companies are monopolized by colusion and lobbying by governments that refuses to properly regulate this theiving industry. $400 to get out of a contract? Tony Soprano wouldn't be that cruel!

  1. chadpengar

    Fresh-Faced Recruit

    Joined: Oct 2001

    0

    Capitalism RIP

    Companies should be allowed to do business however they want when it comes to offering services. Forcing companies to unlock phones is wrong. As long as the government is not providing any subsidies or monopoly rights, the companies and the customers can come to whatever agreements they want.

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