Verizon is currently the only carrier that will sell you a new phone unlocked right out the door, but the carrier is asking the FCC for approval to change all of that. Specifically, it’s asking the FCC to confirm that the C-block rules from 2007 would cover this sort of behavior. According to Verizon, fraud and identity theft are the main drivers behind the action.
The way the proposed lock would work is simple; when a new phone is bought, it will be locked out of the box. It can’t be used internationally with a foreign SIM, and it can’t be used with another carrier. After 60 days, payment or no payment, the device is automatically unlocked. While Verizon didn’t specifically mention the possibility of a temporary unlock for travelers, it’s likely to work with customers on a case-by-case basis in good faith.
While this does mean that fraudsters could simply wait 60 days and sell the phone as a bad ESN unit, this will drastically deincentivize such acts; identity theft can be difficult and even expensive to commit, and phones with a bad ESN or listed as stolen are worth far less online than units that are unlocked outright, or at least in good standing with the carrier that sold them.
Verizon’s take is that this move will prevent fraud that harms both Verizon and consumers. There are many ways to defraud a smartphone carrier like Verizon, but chief among those is setting up an account with false information, getting one or more unlocked devices on a zero-down lease with no intention of paying them off, then selling the devices to unwitting third parties.
In such a scam, what normally ends up happening is that Verizon marks the device with a bad ESN, making it harder to activate and use. The crook is long gone with the end-user’s money, the end-user has a dysfunctional phone that they probably paid close to retail for, and Verizon is out the cost of the device.
Device theft is another common case that this statute would help out with. A carrier lock happens beyond the device software level, so even if a thief manages to get past Google or Apple’s safeguards for ensuring stolen devices aren’t simply reflashed and reused, they won’t be able to use them on any other carriers. Naturally, taking a stolen Verizon phone to Verizon will result in getting caught. Ergo, by the time a Verizon phone would be easy picking for thieves, it’s no longer the newest, hottest thing on the block, and may not be worth the risk anymore.
Verizon has long been the leader in selling unlocked devices, and the rest of the industry has essentially ignored it. While phone locks aren’t as strict as they once were, everybody except Verizon has some sort of lock in place already. In the case of every single carrier, it’s either a requirement for a device to be paid off before being permanently unlocked, a requirement for a certain number of days of active, paid-for service, or some combination of the two. T-Mobile, for example, requires 40 active days of service and a fully paid-off device. This means that neither a longtime customer on a lease or a new customer who bought a phone outright can get a permanent unlock.
The FCC is probably going to approve the request, since it falls in line with industry standards. The policy could be considered more forgiving than others of its ilk, objectively speaking. The FCC under Ajit Pai also has a clear pattern of catering ot the whims of telecom entities, and Chairman Ajit Pai himself used to work for Verizon.