E-Scrap News

Cell phone unlocking ban shakes up recycling industry

The Librarian of Congress has determined it is now illegal to unlock mobile phones, leaving many in the burgeoning mobile device refurbishment business scrambling to determine how the law will affect their business.

The Library of Congress oversees U.S. copyright law, and as of Jan. 26 it now interprets unlocking any carrier-subsidized wireless devices as a violation of the 1998 Digital Millennium Copyright Act, which bans technologies that violate copyright protections. Unlocking devices in order to work with other wireless carriers was previously legal, thanks to a specific exemption in the DMCA, which has been allowed to expire by the LOC.

Violators could face stiff penalties if caught. Criminal penalties include $500,000 and up to five years in prison for a first offense, doubling for subsequent offenses. Defendants in civil cases could pay $2,500 per unlocked device in their possession.

A requested continuation of the exemption was denied last year in an attempt to stop the resale of carrier-subsidized phones. OEMs, as well as carriers such as Verizon or AT&T can still sell unlocked devices at full price, but unlocking a subsidized phone without carrier consent is now forbidden under this new interpretation of the DMCA, regardless of whether that phone is still tied to a wireless contract.

“Because these exemptions weren’t approved, it potentially opens up many individuals and businesses to litigation, although honestly, this is a very controversial decision and we still don’t know exactly what effect it will have,” explains Rebecca Jeschke, digital rights analyst with the Electronic Frontier Foundation. “The next time there will be an opportunity to re-add the exemption will be in 2015, so hopefully people will make their voice heard and it will be included.”

One of the key selling points of refurbished phones is the ability to use them unlocked on budget and no-contract carriers and the decision caught some in the mobile refurbishment and resale community off-guard.

“We’re still reading through the language to try and determine how it affects us, but we don’t see a problem so far. We receive unlock codes for our phones from carriers,” says ReCellular CEO Stephen Manning. “Of course, when they write these types of laws, they don’t always think of the unintended consequences, so it’s something we’re going to continue to monitor.”

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