March 25 (Bloomberg) -- What if, when you bought a new television, you had to decide which electrical network you’d like to use it on. That is essentially the problem most Americans face whenever they buy a mobile phone.
Subsidized Verizon Wireless handsets can’t function on AT&T Inc.’s network, and AT&T handsets don’t work on Verizon’s. This technical limitation, which is backed up by rules borrowed from copyright law, makes competition between the networks unrealistic. Other countries view this situation with amusement.
Congress and the Federal Communications Commission can fix it: The public licenses that allow carriers to operate their networks should carry the obligation to allow customers to use any handset they like.
Both AT&T and Verizon Wireless sell handsets to their customers below cost, then recoup the loss and add a hefty profit by way of contracts that last for years. According to a rule issued earlier this year by the U.S. Copyright Office, without permission from the companies, consumers may not legally “unlock” the handsets to enable them to work on a network other than the one they were designed for.
Using copyright law to police mobile phones seems like applying food and drug regulation to cars: It doesn’t fit. But the Copyright Office argues that the computer program that allows a mobile phone to be used on a certain network is not only a mechanism for protecting the carrier’s business but also a creative work, like a novel.
A 1998 law, the Digital Millennium Copyright Act, prohibits gaining access to something that is copyrighted by working around its technical shields. Although in the past the Copyright Office has allowed an exception for consumer unlocking of mobile phones, this year it switched gears and banned the practice.
Earlier this month, after 114,000 Americans signed a petition protesting that decision, the White House said it didn’t like it, either. FCC Chairman Julius Genachowski has said the ban on unlocking raises concerns about unfair competition. Lawmakers in Congress from both parties have introduced, or are planning, legislation, and we can expect a flurry of hearings soon.
More significant than the legality of phone unlocking is what’s at stake for Americans. As a practical matter, even an unlocked phone may not work on certain networks because it lacks the radio transmitters and receivers it needs to function there. Verizon Wireless and AT&T intentionally use separate portions of radio spectrum. And different radio transmitters take best advantage of different frequencies. Those that are built for one carrier won’t necessarily work on the other’s network.
This is fine for big and powerful Verizon and AT&T. Device makers and computer-chip manufacturers will build customized mobile phones for each of them. However, as the Competitive Carriers Association has pointed out, manufacturers will have no incentive to make mobile phones for smaller and regional companies at a competitive cost.
The FCC, with backing from Congress, should allow consumers to bring their devices to any network they want to use. And carriers should be required to sell access to their networks to all comers, not just those who buy single-network devices.
The next time you are faced with a long-term contract for a deeply subsidized handset that is locked to one carrier, remember that wireless networks are constructed on public airwaves. This is a problem we can fix.
(Susan P. Crawford, a contributor to Bloomberg View and a professor at the Cardozo School of Law, is the author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.” The opinions expressed are her own.)
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