The Law Against Unlocking Cellphones Is Anti-Consumer, Anti-Business, and Anti-Common Sense

The legal argument -- and the business case -- against the rule making it illegal to take your phone to a different carrier

Since I called the Librarian of Congress's decision against unlocking cell phones "the most ridiculous law of 2013," legal experts, techies, and other readers have written to tell me they, too, consider the restriction an outrageous violation of property rights. In particular, several people asked, "No one would really get into trouble for this. Right?"

Maybe not. But as I said, the real problem is not the danger that average people would get a $500,000 fine and 5 years in jail. The problem is that 95% of the accused currently accept a plea deal and would accept almost anything to avoid risking such a stark penalty and that this stark penalty can be used by companies to scare average consumers from exercising their own property rights. For that reason, this restriction violates one of our most basic and fundamental of freedoms and represents an Orwellian invasion of our personal liberty.

The legal instrument that makes this activity illegal is the Digital Millennium Copyright Act of 1998, which contains a broad, vague section making it illegal to circumvent digital protection technology. The Librarian of Congress decided that the protection available to consumers through an exception as no longer necessary, therefore, presumably making this now illegal. Cellphone companies can now intimidate ordinary people who are forced to wonder who exactly owns the phone that they've legally purchased.

This isn't a debate about big business vs. little consumers. It's a story of crony-capitalism. (In fact, T-Mobile was asking their customers to unlock their phones until Saturday when this became illegal for new phones, as you can see in this image).

THE DMCA vs. YOUR PHONE

The DMCA was initially set up to help stop piracy. So what, you might wonder, does piracy have to do with unlocking your phone? Very little. The law made it illegal to use technology to circumvent digital protection technology. The Librarian of Congress, who has power to grant exceptions to the law, has kept seemingly harmless activities illegal. For example, a court can shut down a blog or website simply for discussing the techniques and procedures on how to back up a DVD to your home PC (and they have done so). This is remarkable considering that in the Pentagon Papers case the Supreme Court ruled that a court cannot order an injunction to prevent the release of classified documents unless under extraordinary circumstances in which the government can demonstrate "grave and irreparable danger" to the public interest. So, releasing classified documents: allowed. But discussing how to back-up DVDs and unlocking phones: illegal.

Some have argued that prohibiting unlocking phones is important to enforce contract law. But the DMCA is concerned with protecting copyrights. It has nothing to do with enforcing contract law. The law is being co-opted to serve the interests of one or two phone companies. And the contract argument is specious, even if you unlock your phone, you are still under contract with your cellphone provider, unlocking your phone has nothing to do with contract law and everything to do with basic property rights.

We must ask ourselves: "What specific limitations upon our personal freedom and liberty are we prepared to accept in the name of achieving the goal of protecting intellectual property?" Some limitations may be sound, and Congress should debate them on the record. Obviously, we do not have the right to copy books, movies and music and sell them. But other restrictions are invasive and have nothing to do with protecting intellectual property (like unlocking and jail-breaking your phone or adaptive technology for the blind to read). Restrictions upon the use of technology should receive strict legislative scrutiny because of its impact upon innovation and our personal freedom.

Congress's inaction in the face of the decision by the Librarian of Congress represents a dereliction of duty. It should pass a new law codifying that adaptive technology for the blind, backing up DVD's to your computer, and unlocking and jail breaking your phone are lawful activities regardless of the decisions of the Librarian of Congress.

Instead, Washington has removed a business model, hurt consumers and chosen winners and losers in a dynamic and emerging market. These decisions have a real impact on real people without the resources to hire lobbyists. Sina Khanifar (@sinak) is one of them, and he has even drafted a White House petition to reverse the ruling by the Librarian of Congress. So far the petition has over 61,000 signatories.

Sina, now a co-founder at OpenSignal, was challenged under the DMCA for unlocking phones while in college. Here's his story:

SINA'S STORY

In September 2005, I received a cease and desist letter from Motorola for selling software to unlock their cell phones.

The letter indicated that I was in breach of the Digital Millennium Copyright Act (DMCA) by circumventing protection measures in their phones, a crime that's punishable by up to 5 years in prison and half a million dollars in fines per incident. At the time, I was an undergraduate student studying Physics. The prospect of 5 years or more in prison was devastating.

A HUNGRY STUDENT

I started unlocking phones after a typical entrepreneurial experience: I had a problem and was forced to find a solution. I'd brought a cell phone from California to use while attending college in the UK, but quickly discovered that it wouldn't work with any British cell networks. The phone was locked. Strapped for cash and unable to pay for a new phone, I figured out how to change the Motorola firmware to unlock the device.

Realizing that others were likely having the same problem, I worked with a programmer to create an application that allowed people to quickly and easily unlock their Motorola phones and use them with any carrier. After my first year of college ended in summer of 2004, I launched a website (Cell-Unlock.com) selling the software. It was a make-or-break moment for me personally. I was in a major financial crunch.

At first sales were slow, but during my second year at college Motorola released the extremely popular RAZR V3, and my website became a success.

It was then that I received Motorola's cease and desist letter. It claimed that I was in violation of the DMCA, a crime punishable by up to $500,000 in fines and five years in jail per offense. I was 20 years old and terrified; my immediate reaction was to shut down the business.

I was preparing to do just that when I was introduced to Jennifer Granick, founder of Stanford's Cyberlaw Clinic. She offered pro bono help, and worked with me to respond to Motorola's demands.

THE DMCA AND UNLOCKING

Motorola's cease and desist letter didn't claim that I was illegally distributing their copyrighted software. Instead, it claimed that I was "distributing software ... for the purpose of circumventing the protection measures" associated with their copyrighted software. There is a subtle but meaningful difference.

The DMCA includes anti-circumvention provisions that are intended to protect music and movie owners who want to distribute their work digitally, but are afraid of piracy. The provisions prohibit anyone from circumventing the locks that control access to copyrighted works. For example, DVDs are protected by a Digital Rights Management (DRM) system that attempts to prevent anyone from easily making copies of movies. The DMCA prohibits circumventing that type of protection system.

But unlocking a phone has nothing to do with copyright infringement, and using the DMCA to prosecute unlocking cell phones is not what the law was intended for. If Motorola's interpretation of the DMCA were valid, companies would be able to create simple software security mechanisms that legally prevent a customer from using a device in any way except that in which the manufacturer intended.

Jennifer helped me respond to Motorola by disputing their interpretation of the DMCA; thanks to her efforts, eventually Motorola decided that a college student wasn't worth pursuing. I was very lucky that they didn't decide to take the case to court.

THE BIGGEST PROBLEM WITH THE UNLOCKING LAW

In the year after helping me with my case, Jennifer Granick fought for an exemption from the DMCA for unlocking phones, and in November 2006 it was granted. That exemption was in place for 6 years, until the Library of Congress and the Copyright Office decided to remove it. As of January 26th, anyone unlocking a new cell phone or providing unlocking services unlocking phones once again risks up to five years in jail for each offense.

For consumers, the consequences of this are fewer choices and increased restrictions to freedoms we currently take for granted. If you're traveling abroad and want to use your current cell phone, you'll need to pay exorbitant roaming charges. As an example, AT&T charges customers $1.50 per minute for calls and $19.50 per megabyte consumed while traveling in Europe. Compare that with the $0.30 per minute and $0.20 per megabyte that you'd be charged in the UK with a prepaid SIM card and an unlocked phone, and it amounts to extortion.

Locking cell phones also prevents consumers from freely choosing their cell carrier. If you decide to change your network, say from AT&T to T-Mobile, the DMCA regulations mean that unless your carrier agrees to unlock your phone, you'll need to buy a new device. As a result, manufacturers like Motorola and Apple are keen to keep their devices locked so that they can sell more phones.

The CTIA, the trade association that represents the wireless industry, claims that the illegality of phone unlocking prevents "large scale phone trafficking operations" that involve unlocking carrier-subsidized phones and selling them abroad. But consumers who buy subsidized phones commit to two-year contracts with hefty early-termination fees (up to $350 for most carriers). The carrier's subsidies are already contractually protected.

The decision to remove the exemption for unlocking phones is bad for consumers, and it's up to our elected officials to help defend consumer rights. Unfortunately, the Library of Congress and the Copyright Office are staffed by unelected officials who aren't directly beholden to voters.

I was fortunate that Motorola weren't more motivated and didn't take my case further. The company I started still exists, now run by my brother. With the unlocking exemption removed, it's only a matter of time before entrepreneurs and consumers are once again bullied by carriers and manufacturers seeking to protect their profits by constraining consumer choice. Next time around, a Verizon, AT&T, or Apple will likely take the case to court, and it's possible that someone will end up in jail."

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