AT&T Warns FCC of the Risks with Mandated Handset Unlocking

WASHINGTON, Oct. 9, 2024 – For more than a decade, AT&T has pushed back against more stringent federal rules requiring wireless carriers to unlock mobile phones. 

With the latest proposal from the Federal Communications Commission to standardize handset unlocking within 60 days of service activation, AT&T has once again warned of dire consequences – higher prices, increased fraud, and reduced financing options for customers. 

AT&T’s opposition on Monday was a familiar refrain. In a meeting with FCC staff, including Barbara Esbin, deputy chief of the FCC's Wireless Telecommunications Bureau, representatives of AT&T claimed that these new rules would hurt low-income consumers by making installment plans and promotions harder to offer. 

But for many in the industry, AT&T’s arguments feel like a well-worn playbook that no longer resonate in a market where consumers desire more choice and flexibility than ever before.

For FCC Chairwoman Jessica Rosenworcel, it’s a matter of consumer rights: “You bought your phone, you should be able to take it to any provider you want,” she said in a July statement.

The FCC's proposal seeks feedback on whether the unlocking requirement should apply to existing or future contracts, as well on the potential impact on service providers.

If the FCC were to allow unlocking phones before they are fully paid off, it would be a significant departure from current practice. Currently, phones typically remain locked until they are fully paid off under financing agreements.

One of AT&T’s biggest competitors – Verizon – supports the FCC’s new proposal as a way to enhance competition and reduce the hassle consumers face when switching carriers. Verizon already has to unlock phones after 60 days as part of a 2007 spectrum purchase agreement.

While AT&T continues to argue that unlocking would undermine its ability to offer affordable financing, Verizon sees the potential for increased consumer mobility to actually strengthen competition.

“If the FCC does anything in this space, it should take into consideration maintaining existing contractual arrangements between customers and providers, ensure that providers have at least 180 days to detect fraud before unlocking a device, and include at least a 24-month period for providers to implement any new rules,” AT&T said in its filing.