Library of Congress ruling could unlock phone locking

WASHINGTON-TracFone Wireless Inc., the nation’s largest prepaid wireless company, said it is considering filing a lawsuit in federal court to repeal a new Library of Congress rule that exempts mobile-phone locking software from U.S. copyright law.
“Although TracFone believes that the exemption to the Digital Millennium Copyright Act . was not intended to apply to prepaid wireless service, we are nevertheless concerned that its ambiguous language may be exploited in a way that will be extremely harmful for consumers and the public at large,” said James Baldinger, outside counsel to Miami-based TracFone.
The lawsuit could be filed as early as Dec. 4 in Florida federal court.
“TracFone believes that the courts will not allow the new regulation to stand, but also urges consumers to contact their elected representatives about fixing the harm caused by the misguided action of the Librarian and Register,” said Baldinger.
The Library of Congress last Monday issued a final rule on the handset locking software exemption, accepting the Nov. 17 recommendation from the U.S. Copyright Office. The exemption was sought by The Wireless Alliance, a Boulder, Colo.-based cell-phone recycling company.
The long-term implications of the Library of Congress ruling-which became effective Nov. 27-are unclear. Mobile-phone carriers have significant leverage with handset vendors, being the biggest customers of the latter. On the surface, it appears a blow to manufacturers and carriers alike. Carriers typically bundle service and equipment, the latter subsidized to make the package attractively affordable to prospective buyers.
The Library of Congress decision, however, has the potential to disrupt the service-subsidized phone business model, possibly giving handset makers more leeway to market their products directly to the public as vendors do outside the United States. It would not be unprecedented in the consumer electronics mass market. There is a growing trend of devices being made to connect to any number of communications networks free of discrimination. As such, the ruling could enable wireless handset vendors to offer a far greater variety of models than that available to consumers through wireless carriers. Such a shift could give handsets more leverage in business dealings with mobile-phone operators.
For its part, TracFone has used copyright law in court to halt small firms from buying and unlocking large quantities of TracFone handsets.
“This new regulation may force TracFone and other providers to substantially increase their retail prices for wireless phones, making it more difficult for many of the most vulnerable members of society to obtain this often life-saving service,” said Baldinger. “In addition, criminals who purchase large quantities of wireless phones to be hacked and sold overseas may use this regulation as a shield to attempt to protect themselves from civil and criminal liability for their illicit activity. TracFone has aggressively pursued legal action and worked with law enforcement to combat that activity, and will continue to vigorously pursue those efforts regardless of the outcome of its court challenge to the exemption.”
Wireless industry trade association CTIA said the Library of Congress rule does not prevent operators from continuing to lock handsets, but merely removes copyright liability for unlocking them.
Indeed, the trade group suggested it would be business as usual going forward. “While we are still reviewing the decision, it is clear that the order does not prevent carriers from locking handsets-it only removes a legal tool carriers have used to enjoin persons who unlock the handset without the carrier’s consent,” said Joe Farren, a spokesman for CTIA.
Several national carriers lock handsets to their networks, but allow phones to be unlocked when subscribers fulfill obligations of their service contracts. Verizon Wireless said its practice is not to lock the phones of the vast majority of its customers, meaning those on post-pay plans under term agreements.
The largest U.S.-based mobile-phone manufacturer offered a somewhat ambiguous reaction to the Library of Congress decision. “Motorola is reviewing the implications of the recent ruling by the U.S. Copyright Office. We are working to ensure that any actions we take support consumer needs while complying with any contractual obligations,” said a Motorola Inc. spokeswoman.
The copyright office declined to accept late-filed comments from CTIA and TracFone.