It’s now illegal to unlock your cell phone

This country really is owned by the corporations. It’s sad, but this is a perfect example.  American cell phone companies already charge us an obscene amount for often spotty service (I wrote a while back about my French cell phone plan that costs $25 a month and has unlimited calls and text, including free calls to the US from France).  My iPhone plan here in the states – the “cheap” plan – costs me $93 a month.

No, but that wasn’t enough for the greedy cell phone companies.

Not only will they not unlock your phone (except under some circumstances, differs by carrier), but now it’s “illegal” for you to get it unlocked yourself.

An unlocked phone is one that can work with any cell phone service (even that’s a bit more complicated, but that’s the essence of it).  Currently, when you buy a phone, it’s usually locked to the carrier you’re using, and you can’t just switch to another carrier and use the same phone.  Unless of course you want to pay a ridiculous surcharge for the phone in the first place (like paying $650 instead of $200 for the phone).

The carriers argue that they can keep the phones locked because they’ve subsidized the “cheap” price of $200 to $300 for iphones.  Puhleez.  I refuse to believe a cell phone costs nearly $700, but the phone company is being “nice” selling it to us for only $200 to $300.  I just do not believe it.  And Apple is to blame as well – since they’re the ones who set the prices for the iPhones in the first place.  I love Apple, have a lot of Apple products, but I refuse to believe the iPhone costs them $700.

The Atlantic has more on this, but the implications are important.  AT&T will unlock your phone after you’ve had it for two years.  And while Verizon was willing to unlock my phone now, that was only for international cell phone providers – it’s not unlocked I switch to another American cell phone provider.  So if I leave Verizon, my iPhone is worthless as a phone.

Again, these companies are already charging us obscene rates compared to what people pay in Europe for better plans, and they’re charging twice as much as a better plan at Walmart (I know, we hate them, but the fact remains that they charge $50 for a plan that costs you $90 with Verizon or AT&T).  I’m sorry, but that’s just obscene.

PS Cable TV in America is ripping off you too.  You can get it for $35 a month in Europe, and that includes a home phone with unlimited calls, and cable TV.  But we’re #1.


Follow me on Twitter: @aravosis | @americablog | @americabloggay | Facebook | Google+ | LinkedIn. John Aravosis is the editor of AMERICAblog, which he founded in 2004. He has a joint law degree (JD) and masters in Foreign Service from Georgetown (1989); and worked in the US Senate, World Bank, Children's Defense Fund, and as a stringer for the Economist. Frequent TV pundit: O'Reilly Factor, Hardball, World News Tonight, Nightline & Reliable Sources. Bio, .

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  • DeanIverson

    lol @ $700production costs, there is literally no retooling to manufacture a cell phone, its not like a car or motorcycle anyways,perhaps some relearning some schematics and overall assembly but nothin to speak of, its basically like building your own computer..

    apple claims it costs around $168 to build each phone, maybe if they bought each peripheral at retail, but at bulk I would think around $20, anything more and theres no way they would take the risk and invest 25 million into these phones with nothing more than a 4% profit margin, no way!

    $700 to build an Iphone? maybe the prototype, after that its all extremely cheap labor and CHEAP parts, Apple? seriously

    sure they say it retails at $700 because they can say whatever they want, that deosnt mean it even comes close to costing that much per unit to pump out. can you imagine oif there was a serious issue and they had to recall every phone 2 months later?

    out 20 million, I don’t think so, the technology that goes into these phones are so spoon fed and old school its laughable, “I-crack” up when the circle jerk form over the latest gen..

    nope its a serious scam from the start and consumers get raped at every turn, hardware a service costs are out of control..

    do yourself a small favor and just do a quick estimate on what a carrier makes per month off service provision, like this

    in the US there are 325 million cell phones in use,lets say at&t provides a mere 10% of the service plans in America.. OK?

    round it down 32 million plans in the US, lets give them the benefit of the doubt for family plans (multiple phones on a single plan) and round that down to 20 million individual plans, OK?

    then lets give them the benefit of the doubt and say the average cell phone bill is a flat $100 a month, OK?

    then lets say the average plan is $100, should be reasonable

    so thats 20 million X $100 per month, now hang on to your hats, we have given them a huge benefit of the doubt and rounded way down right? I think so, close enough anyways

    thats 2 billion per month gross, 2 billion per month!

    thats 24 billion per year, at the rate new cell phones come out and the rate in which users upgrade I would say they make that much in phone cells as well..

    so we are at around 48 billion per year gross, heres another kicker

    late fees,lets say again rounded down that 5% of the 20 million are late each month, OK?

    thats 1 million users late each month, at $5 a month yup you guessed it

    5 million a month in late fee charges per month, thats $5,000,000 non taxable pure profit PER MONTH, 60 million annually on late fees ALONE!

    sure they would go broke if they sold us the phones at cost.. pfft, why I still use a razr, I saw that game unfolding in the computer industry and want nothing to do with it, I refuse to feed the trolls…

    one more kicker, remember when I said lets give them the benefit of the doubt and say they only have 5% of the market share, yea right, its 27% so multiply the 48 billion by 5 and the 60 million by 5

    $250 billion annually and $300 million in LFs annually

    with that sort of rake one would think you could get decent customer service with that outfit?

  • Hal

    also I don’t know what ridiculous plan some people are on with their cable TV service but I pay $68 for internet/TV/phone thru the local cable co

  • Hal

    its ok, stupid pseudo-laws like this do nothing but hurt the carriers who enforce them, thus pushing users more and more toward prepaid and buying phones outright. If anything it’s progress and becomming more like Europe.

  • Hal

    people think this is so cut and dry like its always illegal to unlock a phone. First of all, Verizon is a CDMA carrier. There is no point in trying to unlock a CDMA phone because it used an ESN number instead of a SIM card. Second of all, if you pay for your phone out right you don’t need anyone’s permission to unlock it. Don’t let the media fool you into thinking you’re screwed, it’s just not that simple. Feel free to email me if you need more explanation, I’d be glad to help

  • warpig

    all you did was bitch about your bill. there is no good information in this article/blog. if you like the european system so much then just move there. i know germany is nice this time of year.

  • Samantha

    I don’t disagree with you. The cellular companies are using that markup as an excuse to keep phones locked. But people are blaming the cell companies for the markup, which is not how it works. I was just pointing out that the problems with how this is set up extend beyond the cell companies. Most people have no idea how much it actually costs for the cell company to buy the phones from the manufacturers, so they are selling the phones to the consumer at a loss. Still a bad excuse, it’s just a point of fact.

  • SkippyFlipjack

    the markup isn’t even the issue — if you unlock your phone and ditch AT&T for Verizon you must pay an early termination fee to AT&T that more or less covers that markup.

  • SkippyFlipjack

    If you’re looking for thorough analysis of this nutty law, here’s a good article: http://www.sfgate.com/technology/dotcommentary/article/Law-bans-unlocking-of-cell-phones-4229779.php

  • Larry Ft Pierce

    zing! You nailed it, I remember those people as well.

  • UncleBucky

    Why do you bother?

  • Jafafa Hots

    (oh, but good on you for the cheerleading for the obsessive consumer culture and it’s disposable electronics with toxic components being tossed every year. Your corporate overlords thank you.)

  • Jafafa Hots

    I don’t have a TV, haven’t for 20 years.

    It’s not that I’m cheap, it’s that one day I realized I hadn’t turned on my $2500 big-screen TV in probably a year.

    Same way I have a cheap cell phone now buy end up letting it go months without even charging it.

    Some people need a constant influx of external stimulation.

    Other people tend to find what they need in more quiet and relaxed surroundings, and concentrate on what’s inside and what they are putting OUT, not making sure there’s a constant source of distraction coming IN.

  • akguy

    Lol. John thinks the cell phone companies are greedy and of course hates Walmart. But by golly he LOVES Apple. Ah the joys of the illogical logic of the logically challenged liberal.

  • http://www.carriecann.blogspot.com CarrieCann

    First, I don’t own an iPhone and I will never own any thing Apple. It’s just a decision I made way back when PC users rebelled against Macs. You were either in, or out, and I chose out. That being said, I also have been on prepaid plans for years, bucking the contract phenomena. I currently have a Samsung Intercept smart phone, with 3G wireless and all the bells and whistles necessary for most phone uses (except some graphics technology that would be necessary if I was to want to use my cellphone as a television screen). I can say from my own experience that I have never had any problems with getting and receiving calls, no “dropped calls” issues, and I only spend $40 a month, flat rate, for my service. Granted, I am not using the cell phone as a mini laptop or tablet, and as such, I don’t need the extra data that has become problematic for some cell users (that is what my notebook computer is for). I think prepaid is eventually going to become the norm, once cell phone users get over their reliance on the fantasy safety net of mobile/data plans under long term contracts.

  • Ford Prefect

    The only reason these companies are allowed to behave this way is because: 1) Our government is corrupt and doesn’t care what they do as long as they’re getting paid their share; 2) American consumers are sheep who will pay any price rather than give up even the slightest amount of “convenience.”

    If you want the abuse to stop, then stop voting for crooks and give up your precious “smartphones.” Quotes because I don’t see much that’s very “smart” about slave labor, overpriced goods and services and extortionist rent extraction.

  • http://twitter.com/nklopfen neilk

    Shouldn’t it be illegal for Verizon to unblock the phone too? I don’t get it.

  • Samantha

    Having worked for a cell phone company I can tell you that manufacturers actually do charge carriers upwards of $500 for a smartphone. No idea about the iPhone specifically because I worked for the little magenta guy and they didn’t have it. Cellular companies take a big hit selling you that phone for $300+ below their cost. In the end though it’s the manufacturer with the ridiculous markup. Ultimately it doesn’t make a difference; the consumer still gets screwed. I should be able to do whatever I want with the phone I bought.

  • Naja pallida

    I don’t know, I like having a phone with me, then, I’m also one of those people who tends to have my laptop with me wherever I go too… but I rarely answer calls while I’m on the go, unless it’s important or I’m at a point where it isn’t going to distract from what I’m doing. That’s what they made texting, emails and voicemail for. Nothing more annoying than people who seem to think their phone call takes precedent over everything around them, including their own and other’s safety.

  • SkippyFlipjack

    Apple decided long ago to make high-margin products for a smaller customer base and it seems to have worked out for them. There are a ton of phones available out there and lots are really cheap, so I can’t get that upset over a high margin on iPhones when really, you don’t need an iPhone.

  • http://www.rebeccamorn.com/mind BeccaM

    John was referring to the cost of manufacturing the iPhone — which is $209 and $230 for the 32gb and 64gb iPhone 5, respectively.

    (Source: http://articles.washingtonpost.com/2012-09-20/business/35494758_1_new-iphone-earpods-lte-networks )

    That $400 mark-up between manufacturing and wholesale is Apple’s obscene margin.

  • robertvax

    > I refuse to believe a cell phone costs nearly $700, but the phone
    > company is being “nice” selling it to us for only $200 to $300.

    Believe it. The wholesale price that Apple charges to carriers for iPhones is much higher than the heavily subsidized price that you pay when it’s locked in with a 2-year contract. For example, an estimate from 2010 that the wholesale price to the carriers was $622 per iphone 4:

    http://www.geek.com/articles/mobile/att-pays-622-for-every-iphone-4-says-sony-ericsson-20100630/

    This estimate is consistent with what industry analysts will suggest. Carriers are using subsidized hardware as a loss leader.

    > And Apple is to blame as well – since they’re the ones who set the prices for the iPhones
    > in the first place.

    If consumers would shift their behavior to stop demanding Apple and start being willing to purchase non-Apple phones, then Apple wouldn’t have the sort of market power over carriers that it has today. But because of the huge mob of consumers who have decided to glue themselves to Apple products, Apple has tremendous power to set wholesale prices. It’s a major reason why Apple is sitting on such a huge pile of cash and has a market cap larger than Exxon/Mobile.

    There are plenty of sub-$200 unlocked Android devices available. Consumers do have the power to vote with their feet, but most of them don’t.

    … that said, I do agree that any situation where the Librarian of Congress has the power to make a “thou shalt not unlock under penalty of imprisonment” edict is both ridiculous and draconian.

    – RV

  • nicho

    Takes me back to the ’50s, when people would brag about not having a TV — and how they would never have one in their house. Turns out they were just cheap. They eventually caved.

  • SkippyFlipjack

    while you’re still under contract? I’ve never tried that; why would they do it for you?

  • SkippyFlipjack

    once your plan runs out if you still like your phone change to a prepaid plan. (if you’re sick of your old phone get a new phone and a new 2-year agreement.) taxes are much less than on contract plans and you can choose any provider your phone supports (although that’s usually just one or two providers). this is why your provider sends you offers for new phones when a few months are left in your contract — they want to lock you in before you have leverage to switch to a cheaper plan.

  • nicho

    I’ve had no trouble getting phones unlocked by my carrier. I’ve done it twice. And Verizon sells the iPhone 5 already unlocked.

  • SkippyFlipjack

    this has nothing to do with technology — you can already learn how to unlock your phone, and the cel providers already don’t like it. the only difference is that you can now be prosecuted for it.

  • SkippyFlipjack

    lol.. I think I can hear their knees knocking

  • SkippyFlipjack

    John, since you’re a lawyer I thought a post entitled “It’s now illegal to unlock your cel phone” would contain a bit of analysis about the law itself instead of just a rant about how cel phone companies charge too much.

    The details here seem pretty complicated but it sounds like the DMCA gives pretty broad powers to the Librarian of Congress, who recently made this decision about unlocking phones. Possibly going to jail over the discretion of a single person seems pretty messed up.

  • coemgenus

    Well, American companies have always had an authoritarian streak – trumpeting about free trade whilst at the same time restricting the use of one’s property after purchase. This, combined with ridiculous complications, crummy coverage and clunky design just takes the biscuit.!

  • 2patricius2

    I used to think this till I was rear-ended by a driver on an icy turn on the way to work. She had a cell phone with which to call the police. I had to wait till I got back home to call work to let them know I would not be in. I figured if anything like that happened again, I wanted to have a phone with me.

  • MattA

    The problem in the US is the prepaid carriers are blocked out of the large networks. You can get cheaper prepaid service but you also get very small network areas.

  • http://twitter.com/nklopfen neilk

    You can use prepaid carriers in this way. It is cheaper in the long run, I think in the US as well.

  • http://twitter.com/nklopfen neilk

    In Chile, where I live, it’s actually illegal now to sell a blocked cellphone and if you have an old one, the provider has to unblock it for free. I think this is the way it should be.

    That said, there seems to be a lot of confusion about what this is really about. It’s like saying “I have a key that works on my door, it should work on my neighbor’s door as well.” But if you modify your key so that it unlocks your neighbor’s door, doesn’t he have a legitimate complaint? Can you really say “this is about my key, not about your door?” Carrier blocking is not about the carriers controlling your phone, it’s about the carriers controlling their own network.

  • Ednahilda

    Thank you! I could have written your comment myself almost word for word except for the stuff about Skype. No idea what that is.

    Sadly, it’s getting harder and harder to find a pay phone. I know where to find every pay phone in my regular haunts, but they’re slowly disappearing,

  • MattA

    An iPhone has the same guts as an iPad in a quarter the volume, the unsubsidized price should be around $600. What sucks is that after your two year contract runs out, you don’t get your plan’s cost reduced, in effect you’re paying a phone subsidy whether or not you have a new phone. I’d be happy to pay $600 for a smartphone if I could get a $25 plan, it would be much cheaper in the long run.

  • Cletus

    And when they do, we need to have a national “Unlock Your Phone Day”. It beats rioting in the streets.

  • keirmeister

    It’s my phone and i’ll do with it as I please. I have a hard time believing the phone company will be able to prosecute someone for this. They can complain about breaking their terms of service, but that’s about it.

  • Naja pallida

    Yeah, but since the telecoms are all in collusion with one another, they’ll start saying “Ooops, sorry, we can’t support that phone.”

  • http://www.facebook.com/lindsay.hirsch.94 Lindsay Hirsch

    Be patient, folks; it’s now inevitable that Anonymous will hack and publish the codes needed to unlock your phone…

  • Bukko_Canukko

    One more reason I’m glad I don’t own a cell phone. In addition to the fact that I LIKE being out of reach sometimes (call me on my land line. If I’m not there, I have an answering machine) and I DON’T like having my every move recorded in some telco’s database, I avoid the feeling that I’m being gouged every month by these rapacious bastards. If I want to make a phone call, I’ll do it from home, from work, from a pay phone or with Skype. The best way to fight back against the ripoffs that Aravosis cites is to not to business with these buggers. “Starve the beast” doesn’t just apply to what Grover Norkkkwist wants to do to the .gov.

  • JHyder

    I unlock and root every phone I have,let them waste their time and lawyer money on me and the other 20 million + devs. THIS WILL NOT END WELL FOR THE TEL-CO’S.

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