Is it almost time up for SIM-locked handsets?
Mobile handsets locked to a particular network are becoming a thing of the past, as customers increasingly seek the freedom to move providers as they see fit. How are lawmakers around the world dealing with the matter, and why are service providers so reluctant?
Ofcom’s recent legislative rampage continues apace, with the regulator now setting its sights on the UK’s mobile market, with new rules finally banning telcos from selling locked handsets commencing in December this year.
Currently, O2, Sky, Three and Virgin Mobile sell unlocked handsets, but from December, EE, Tesco Mobile and Vodafone will be forced to join them.
The move is to make it easier for people to switch providers, with many finding the process too great a trouble to go through and locked handsets being a significant factor. According to Ofcom’s own research, more than a third of people who decided against said the difficulty of switching put them off.
Handset unlocking is a potentially complicated process, which can in some cases cost around £10, and take up to ten days for some providers to generate a network unlock code. It’s increasingly seen as an archaic, inflexible practice, given that providers do not place restrictions on other services, such as requiring certain models of TV or computer to access TV or broadband services.
The ban on selling locked handsets is part of a package of measures keeping the UK in line with the new European Electronic Communications Code, designed to make switching providers easier.
The UK joins countries like Singapore, Canada and Chile, who have also forbidden the practice of selling locked phones. In fact, the Telecommunication Authority of Singapore fined provider M1 for selling locked handsets way back in 1997, while Chile banned SIM-locking back in 2012.
Conversely, Bangladesh is considering introducing SIM-locked devices for the first time in order to encourage the take-up of 4G-enabled handsets in the country – an interesting move which goes against the tide of popular opinion.
Hot on the heels of the UK, the US is also looking into a total ban on sales of locked handsets, though the current situation is more complicated. Previously, unlocking a phone there was illegal, thanks to the Anti-Circumvention Provisions contained within 1998’s Digital Millennium Copyright Act – the same legislation that prevents the ripping of DVDs, removing the DRM on media files and jailbreaking consoles or devices to run unapproved third-party software.
2015’s Unlocking Consumer Choice and Wireless Competition Act later made it legal for consumers to have unlocked phones – not by requiring providers to sell unlocked phones, but merely by removing the penalty on customers for unlocking their phones. As such, Verizon is able to sell handsets that remain locked for 60 days after activation, allegedly in an effort to crack down on fraud and stolen phones.
Further complicating the situation in the US is the still-widespread use of CDMA networks (employed by Verizon and Sprint) as well as GSM, creating another barrier to switching for those with incompatible devices. Verizon is expected to close its CDMA network in December 2022.
Following a difficult 2020, the smartphone market is now rebounding, with a 26% jump in worldwide sales in the first quarter of 2021. However, since no phone is truly “free,” providers must still recover the cost of contracted phones, especially as prices continue to rise for new handsets.
A ban on SIM-locking will put power in the hands of the consumer, letting them shop around for the cheapest deal, rather than being forced to stick to one telco, which may not be such an appealing prospect for providers. Furthermore, with locked handsets more likely to end up as e-waste than find a new owner, these new regulations will be good for the environment too with unlocked phones having greater resale value and use.
Telcos must, therefore, provide more to keep their customers satisfied, bundling value-added services and extras on top of the device and subscription, while also keeping customer retention and satisfaction as core to their strategy – lest they find themselves as redundant and disposable as a SIM-locked handset.