Wireless carriers agree to unlock cell phones

The nation’s largest wireless phone companies agreed Thursday to make it easier for customers to “unlock” their phones from carriers’ networks.

Sprint, AT, Verizon, T-Mobile and U.S. Cellular also agreed to notify customers when their phones become eligible to be unlocked, which had been a sticking point in negotiations with the Federal Communications Commission.

Unlocking a phone means it theoretically could be used on another carriers’ network. It’s a tool consumers could use to gain better terms with wireless service providers.

Wireless companies, however, caution that different technologies make the switch from one network to another problematic. Some network technologies are simply incompatible and other differences mean some phones would work only partly on another network.

The principle of unlocking rights, however, likely will prove more valuable to consumers as technological barriers between networks have begun to soften.

FCC Chairman Tom Wheeler had been pressing the industry leaders, through their trade group CTIA - The Wireless Association, to act before the holidays.

In a letter Thursday, CTIA president Steve Largent said the industry would implement some of the changes in the next three months but others would take up to a year. He did not indicate which steps the industry could take more quickly.

Consumers with a typical two-year service contract will be able to unlock their phones once they’ve completed terms of their service, paid for a phone through installments, or have met an early termination fee on the contract.

Customers who buy service on a month-to-month basis would be eligible to unlock their phones no later than a year after starting service, the committment letter said.

Wireless companies also may unlock phones automatically when they become eligible.

U.S. wireless carriers agreed to be more transparent about how to unlock phones while preserves the companies’ practice of using discounts on phone prices and locking the devices to networks to win and keep customers.

Carriers agreed to the changes though they said they already have unlocking policies.

Sprint Corp. “currently provides its customers with the ability to unlock eligible mobile devices and the voluntary agreement we are working to finalize with the commission seeks to further that commitment, ” Crystal Davis, a spokeswoman for the Overland Park-based company, said in an e-mail.

The FCC’s Wheeler said in an emailed statement that the agreement gives consumers “more information about when, and how, to move their devices from one network to another compatible network.”

Wheeler said the agreement ended nine months of talks, which has stumbled largely on the question of notifying customers. He had threatened regulation had the industry not acted.

“It solves the basic problem, which is the lack of transparency,” said Jan Dawson, founder of technology advisory firm Jackdaw Research in Provo, Utah. “You start threatening people with regulation, it really motivates them to figure out how to change their behavior.”

Largent, in his letter agreeing to the changes, emphasized that unlocking phones leaves consumers with relatively few choices about service.

The CTIA’s commitment letter said that “a device designed fro one network is not made technologically compatible with another network merely by ‘unlocking’ it.” Some features may work, such as voice, but not others, such as Internet connections, because of the technology differences.

The unlocking accord will have little effect on the major carriers’ customer retention, said James Moorman, an analyst at S Capital IQ in New York.

“Generally by the time if you’re unlocking your phone after your two-year contract’s done, in this day and age you might want a new phone anyways,” he said.

Unlocking became a political flashpoint last year, when the Library of Congress declared that using software to break a carrier’s safeguards was a copyright violation. President Barack Obama’s administration joined critics of the library’s decision after more than 114,000 people signed an online petition.

Bloomberg contributed.