Wednesday, July 18, 2007

Machinist: On Cell Phone Contracts

Salon:By Farhad Manjoo

But the iPhone, [Congressman Ed] Markey said, 'highlights both the promise and the problems of the wireless industry today.' The phone sells for full price, yet owners get essentially no rights over how to use it; the phone forces you to sign a two-year contract with poorly ranked AT&T service, at pain of a $175 early-termination fee. 'Many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching,' Markey said. And it's not just iPhone owners. Nobody likes their cell provider; people are sick of the fees, they're sick of the stringent contracts, they're sick of the bad cell signal. But what are you going to do? There are four large cell carriers in the U.S. -- AT&T, Verizon, T-Mobile and Sprint -- and none has customers who are particularly happy. ...

Last year, Jennifer Granick, an attorney who directs Stanford Law School's Center for Internet and Society, petitioned the U.S. Copyright Office -- the arm of the Library of Congress responsible for administering the copyright system -- to exempt people from DMCA penalties when they try to unlock their phones. She won. The Copyright Office ruled that it's legal for people to unlock their own cellphones. It's also legal to sell or buy a phone that has already been unlocked.

But there's a complication, Granick told me: The Copyright Office only exempted the act of unlocking your phone, not the act of providing tools to unlock all such phones. Thus you may violate the law if you provide software, hardware and perhaps even instructions to help other people unlock their cellphones. ...

At last week's hearing, consumer advocates and telecom representatives clashed over proposed regulations surrounding early-termination fees. A representative for Verizon asked Congress to prohibit individual states from imposing rules on what kind of terms cell firms can offer in their contracts. Consumer advocates, meanwhile, pressed legislators to force a national rule prohibiting early-termination fees.

"I can get out of a lease for an apartment or a home for about one month's rent," Consumer Union's Chris Murray said. "Why does it take the cost of nearly half a year's service to end my wireless contract?"

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