On July 19, 2024, the FCC released the Notice of Proposed Rulemaking (“NPRM”) seeking comment on using handset unlocking polices to improve consumer choice and flexibility and to enhance competition in the mobile wireless marketplace. The item was adopted at the July Open Meeting. In the NPRM, the Commission tentatively concludes that “adopting a broadly applicable set of handset unlocking requirements for all mobile wireless service providers would serve the public interest,” and proposes to require that all mobile wireless service providers unlock handsets 60 days after a consumer’s handset is activated with the provider, unless the provider determines the handset was purchased through fraud.
The FCC seeks comment on the following:
- Tentative Conclusion: As noted above, the FCC tentatively concludes that adopting a broadly applicable set of handsets unlocking requirements for all mobile wireless service providers would serve the public interest. The FCC tentatively finds that its proposal will: (1) increase market transparency; (2) increase consumers ability to switch service providers; (3) increase competition among wireless providers, leading to lower prices and better service performance for consumers; and (4) reduce regulatory asymmetries and result in more competitively natural regulation among providers. The FCC seeks comment on these conclusions.
- 60-day Unlocking Proposal: The FCC proposes to require all mobile wireless service providers to unlock handsets 60 days after a consumer’s handset is activated with the provider, unless within the 60-day period the service provider determines the handset was purchased through fraud. Under this approach, the handset unlocking requirement would apply to all mobile wireless service providers prospectively. The FCC seeks comment on methods to determine if a handset was purchased through fraud, the burdens of the unlocking proposal, whether the time period should be shorter or longer than 60 days, and the methods service providers use to combat fraud and device theft, among other things.
- The Impact of the Proposal on Current Contracts: The FCC seeks comment on the impact of its proposed unlocking requirement on current contractual arrangements between service providers and consumers. Specifically, the FCC seeks comment on whether it should continue to apply existing, voluntary unlocking commitments to existing contracts, the effect its proposal will have on incentives for providers to offer discounts on handsets, and how to best balance the needs of service providers to ensure they are reimbursed for the handset with the needs of consumers with locked handsets to transfer to a different service provider, among other things.
- The Transition Period and Implementation Issues: The FCC seeks comment on the appropriate transition period and any implementation issues that the FCC should consider. Specifically, the FCC seeks comment on whether the unlocking requirement should become effective upon publication in the Federal Register or if a longer transition period is required, whether the FCC should provide for automatic unlocking of all new handsets, whether there are technical or implementation issues with its proposed approaches, and how to inform consumers of unlocking policies, among other things.
- Other Issues: The FCC seeks comment on its legal authority to adopt such rules and whether its proposed rules will advance the FCC’s goals of promoting digital equity and inclusion.
Comments will be due 30 days after the date of publication in the Federal Register and replies will be due 60 days after the date of publication.
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