East Valley business owners question laws aimed at halting 'unlocking' mobile phones - East Valley Tribune: Business

Locked in? East Valley business owners question laws aimed at halting 'unlocking' mobile phones

As a new line of high-tech mobile devices hit the market, local businesses question laws that prohibit ‘unlocking’ of cell phones, other electronics

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Posted: Sunday, September 22, 2013 11:17 am

“If you can’t modify something you’ve bought, do you really own it?”

That’s the question digital rights advocate and

FixtheDMCA.org founder Sina Khanifar is asking.

It’s a question that some cell phone businesses — including a number in the East Valley and greater Phoenix area — have also struggled to answer since late January.

As of Jan. 26, consumers can no longer “unlock” their mobile devices without permission from their cellular carrier, even if they own the device free and clear — contract or no contract. This came as the result of a change to Section 1201 of the Digital Millennium Copyright Act last October.

“For a carrier to dictate with whom you may use your product, a product that you own outright, is nothing short of a monopoly and should be banned completely,” said Annie Thompson, co-owner of Chandler-based business,

unlockmyidevice.com.

But support for a bill currently under review by the House of Representatives, H.R. 1892 or the Unlocking Technology Act, could change the legislation.

Unlocking a phone makes a phone available to use on any similar network with a different carrier. Carriers like AT&T and T-Mobile are on a GSM network meaning they use SIM cards (which can be swapped between phones), where Verizon Wireless or Sprint devices work on a CDMA network.

For example, a T-Mobile phone that is locked will only work on the T-Mobile network if the phone was purchased in the U.S. from T-Mobile; but once it is unlocked, a consumer can use it with another GSM carrier like AT&T, use the phone internationally, or with prepaid services that use a SIM card like Wal-Mart’s Family Mobile. A phone with Sprint’s service could be “flashed” or use a network access code to work on another CDMA carrier’s service, like Cricket.

Thompson and her co-owner, Greg Bingaman, support the Unlocking Technology Act and believe that they could branch out the services they offer if the bill passes.

Thompson and Bingaman’s website and business started in February. Thompson and Bingaman wanted Apple iPhone devices for the service they had at the time, but it was too expensive so they purchased two older models off Craigslist and had them unlocked to use with their current service provider.

“It [the DMCA] renders a high dollar electronic product that you own completely useless if you want to choose to go with another service provider. That is what should be illegal,” said Thompson.

Wireless Toyz manager Miguel Duran said this summer he wasn’t very knowledgeable about the current legislation, but he knows enough to disagree with it.

“We unlock maybe one phone a month and they’re usually older phones,” he said about his Mesa store on 1960 W. Baseline Rd. His store has been in business for about six years and he believes that although unlocking isn’t a common request for his business, it’s his customer’s property and they should be allowed to do with it what they want.

Dan Schoenherr, owner of Sun Cellular Inc. on 3329 E Bell Rd #14a in Phoenix, said he got involved in repairing mobile phones in 1995. He unlocks phones for customers too and has lived through all the changes in legislation.

“I see both ends of the spectrum, where the consumers and carriers are coming from.”

Schoenherr purchased his current location from the previous business owner after working for him and getting to know him when he left a job at Verizon. He doesn’t believe the UTA, if it’s passed or not, will have too much of an impact on his business.

“Me personally, it won’t affect my business. I repair phones more often than I unlock them,” he said.Prior to the change in the DMCA, consumers could go to third-party businesses or online sources to unlock their device so their phone can work with different carriers, sometimes without the knowledge of the carrier who sold them the phone.

But that exemption put cell phone carriers at risk for financial loss because a consumer could start a contract with a carrier in order to have a new phone without paying full retail price for their phone. For example, a 16 gigabyte Samsung Galaxy S4 is specially advertised at $199.99 with a two-year-service agreement with AT&T and normally the retail value of that same phone is $639.99 at the same carrier without a contract.

This subsidized pricing is standard practice for mobile carriers Even though consumers may face a large cancellation fee as a penalty for opting out of a contract early, it’s argued that it wouldn’t cover the carrier’s loss of the phone and service fees, thus allowing the consumer to make a profit by selling their phone for retail value. Early termination could also hurt a consumer’s credit score too, but to some may believe it to be worth it in the short-term.

Khanifar, who lives in California, started a White House petition titled “Make Unlocking Cell Phones Legal” and accumulated 114,322 signatures after the Jan. 26 change, with 1,676 of the signatories coming from Arizona.

Khanifar made a business out of unlocking phones while an undergraduate in college. He started after unlocking his own U.S. phone when overseas in 2005 to use it on international networks. He turned it into a business, but said he eventually received a cease and desist notification from Motorola for violating section 1201 of the DMCA.

Section 1201 states that, “No person shall circumvent a technological measure that effectively controls access to a work protected under this title,” but unlocking phones was given an exemption to this measure by previous rulings on the DMCA. If a measure is circumvented, it means that the software which controls the way we can access copyrighted works on a device is bypassed.

For example, there are software codes put into a DVD to protect it against piracy and making copies of that DVD, but if the software is circumvented, then the DVD can be easily copied.

Since Jan. 26, anyone who violates the Section 1201 ruling could be fined with up to $500,000 and/or imprisoned for up to five years for violating copyright, a felony that Ruth Carter — owner of Carter Law Firm in Phoenix which practices Intellectual Property cases among others — says most people don’t take seriously.

Arizona Republican Sen. Jeff Flake’s Communications Director, Bronwyn Chester, said this summer that once the bill is introduced in the Senate, Flake would definitely take a look at it, but for now he hasn’t seen it because it is still in the House of Representatives.

Khanifar said he had met with Flake when advocating in Washington D.C. about a month ago and he seemed very new to the legislation but eager to learn more. Khanifar says he has also received support from 8th Congressional District representative Trent Franks.

With the Unlocking Technology Act, there would be benefits beyond unlocking cell phones says Khanifar. It would allow people to modify and repair their electronics without risk, allow more security research, allow people to make copies of their CDs and DVDs for personal use, and allow e-books to be modified so that visually impaired individuals can use read-aloud technology.

The Unlocking Technology Act is sponsored by U.S. Rep. Zoe Lofgren , D-Calif., and six other co-sponsors. As of June 14 it was referred to the Subcommittee on Courts, Intellectual property, and the Internet in the House.

“This bill reflects the way we use this technology in our everyday lives,” Lofgren said in a press release. “Americans should not be subject to fines and criminal liability for merely unlocking devices and media they legally purchased. If consumers are not violating copyright or some other law, there’s little reason to hold back the benefits of unlocking so people can continue using their devices.”

Petition and White House Response can be viewed here: For more information on Khanifar’s White House petition, visit evtnow.com/5uz.

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