Locking phones is not at all a requirement for carriers to offer subsidized deals. They could offer phones on installment plans conditional on an N-month contract. The buyer could switch carriers and keep the phone, but be on the hook to pay off the rest of the contract term. The only reason to use technological locks is to further trap a customer into a carrier relationship beyond the legal terms of their contract. It's yet another example of companies violating long-standing rights and norms and getting away with it because there's a computer involved.
What happens when the buyer says "no, I'm not paying" and sells the phone?
Instant money. Meanwhile the telecom company has to sell the debt at a massive discount to a collections agency or spend a ton of money collecting on it. That's assuming it can be collected on at all from someone that might just be running a scam.
With a locked phone, the phone just stops working and loses most of its value.
A rule forcing carriers to unlock phones after the term is up is fine. Forcing them to do it before is illogical. How many people are going to pay for two plans on one phone because they didn't like the first plan? I doubt it's more than those who will immediately abuse this rule and stop paying for the phone. I don't see the benefit to society here.
> What happens when the buyer says "no, I'm not paying" and sells the phone?
This is just like any thing you get a loan for. It goes to collections and your credit gets hurt. Why would normal consumers have restrictions because of bad actors?
AT&T operating income for 2023 was $23.5B and T-Mobile was $8.3B. Carriers are doing just fine.
The point is loans are generally secured with collateral. The bank can repossess your car or your house. It's worth it to go through the expensive repossession process because those items are high-value.
A carrier just eats the loss on a phone they provide but don't get paid for. The kinds of people who skip paying their cell phone bill generally have bad credit to begin with and couldn't care less if it goes to collections. The recovery rate for collections is pennies on the dollar.
And you know who will suffer if more people are able to basically keep phones for free? Not the carriers. They'll just jack up prices for everyone to offset the additional losses. You think they're just going to eat the cost themselves?
Why would a carrier give someone a phone if they have bad credit? It's not like they are mandated by law to provide everyone the latest iPhone regardless of credit score.
I worked in customer support for Rogers(A Canadian phone carrier) for a very short period before it was mandated to have unlocked phones and people still stopped paying their bill even if the phone was locked. The vast majority of people want to pay their bills on time especially for something as critical as phone service. The people who don't, are going to not pay their bill no matter what sort of rules in place because they either simply don't have the money or they don't care.
> Why would a carrier give someone a phone if they have bad credit?
Because phone locking means they're much more likely to pay it off, and so an unprofitable customer segment becomes a profitable one. Everybody wins -- the carrier doesn't lose money, and more people get phones.
> The people who don't, are going to not pay their bill no matter what sort of rules in place
That's simply not true. If it were, then carriers would never have bothered with the administrative overhead of locking phones in the first place. People do respond differently to economic incentives like whether their phone will turn into a brick or not -- that's Econ 101.
> That's simply not true. If it were, then carriers would never have bothered with the administrative overhead of locking phones in the first place. People do respond differently to economic incentives like whether their phone will turn into a brick or not -- that's Econ 101.
Well its not like they have to individually lock each phone they sell by hand and your phone does not turn into a brick if its locked to a carrier. Yes definitely the functionality is drastically reduced but there are also people/services that will unlock your phone for you that don't work for the carrier. Maybe if the phone actually was unable to be used at all if it was locked and you didn't pay the bill, that would be a valid argument.
I can't really agree with just because they do it, it must work argument, I have, and I'm sure you have too, worked for a lot of companies that had policies or practices that did not work.
I worked in customer service for Rogers, a large telecom in Canada before unlocking was mandated. There were lots of customers that did not pay their phone bill despite their phone being locked. If people don't have the money (whether it be their fault or not) they aren't going to pay their phone bill no matter what sort of incentive you give them.
Simple. Since the major carriers these days offer "interest free installments" on phones, with subsidies or billing credits to make the TCO cheaper... then when this happens, the carrier: 1) loses no interest payments, 2) may lose installment payments, but this is a credit risk anyway - onus is on them to assess risk to a point of acceptability to them, and 3) get to not pay out the subsidies or billing credit.
All this amounts to is an additional layer of securing a loan. And pre-emptively so. "You cannot unlock this device because others may abuse this."
Assess identity and credit risk better.
I have little sympathy for the carriers, after having to fight Verizon over the claim that I, living in Seattle, and being an AT&T customer for a decade with 4-6 lines and devices, somehow decided to go to El Paso and buy a phone at a Walmart on Verizon, run it up making international calls and let it go to collections.
After supplying their (onerous, tbh) info around identity, police report, current utility billing and such, VZW said "We are still satisfied that the debt is valid and belongs to you, after reviewing your documentation with documentation that was supplied when the account was opened". When I said "well, given that you have verified my identity, and given that you state that the documentation you have from the account says that it was I who opened the account, I'd like to see that documentation". Verizon: "We cannot provide that data to you as it may violate customer privacy". Schrodingers account holder. It's me when they want to collect money, it's not me when they're concerned about sharing "someone's" info or billing records...
Being able to use a second carrier without cancelling a contract with the first is useful for international travel; the 'roaming' rate is often much higher than the normal rate of other countries' local telcos. Plus, mixing-and-matching plans can be advantageous to the user in certain situations even within one country. For example, data-only plans are typically cheaper than data+calls, but one might still want a very modest calls plan for infrequent use - sometimes, better value can be attained by combining two separate contracts. Of course, whether or not telcos ought to allow such use of their contract handsets is another question entirely!
If there’s a big enough market for this use case, I suspect at least one carrier would do so. I’d imagine this would include some sort of payment in escrow, temporary unlock feature, or an optional add-on.
Otherwise, folks in this position should just buy the phone outright and unlocked so they don’t have any issues like you’re describing.
The counterpoint is that by locking people into carrier relationships allows T-Mobile and AT&T to offer loans on consumer electronics at much more consumer-friendly rates than others in the same business, e.g. Rent-A-Center. As I note downthread, `The total cost to buy a PS5 Slim is $500, the total cost to get a PS5 Slim through my nearest Rent-A-Center is $1,349.50.` You could introduce this pricing for iPhones for poor people too! This might even incentivize more people to use low-end Android hardware! But let's not act like this is 100% a good thing for everybody.
> The counterpoint is that by locking people into carrier relationships allows T-Mobile and AT&T to offer loans on consumer electronics at much more consumer-friendly rates than others in the same business
How does it do that? Its a lock to force people to stick with a provider, and pay through the nose in other ways. Phone plan rates in the US are terrible, restricting peoples ability to change provider through artificial means doesn't provide better rates.
Because it greatly lowers the risk that AT&T will need to write off the debt for your phone and sell it to a collections agency for pennies on the dollar.
It’s the same difference as a home mortgage vs unsecured credit card debt: When the threat exists that the lender can repossess your home if you don’t pay… they don’t have to worry as much about you not paying your mortgage, so they can offer a much lower rate.
You buy a phone for $1k, but you do it through your carrier, along with a $50/month plan. Because you’re on this plan, the carrier offers $600 off the phone price, paid in account credit over 24 months ($25/month), so your total monthly bill becomes $67/month for 2 years, then $50/month at the end of 2 years.
If, 3 months in, you find yourself unhappy with your carrier, you can still pay the remainder of your phone cost ($875) to own your phone outright and walk away. In that time, you’ve saved $75 off the full price of the phone.
Arguing that US carrier prices are exorbitant is not relevant to whether carrier locks and phone discount credits are worthwhile or cost effective.
I'm not sure what that has to do with locking your phone.
If you have a line of credit for the cost of a phone, then you have a line of credit for the cost of a phone. If you have a contract for service, them you have a contract for service.
If you try and terminate either then they will reclaim based upon your contract with them.
And the lock is collateral against a small, high-demand object that can easily be fenced. The phone lock is essentially the same as a hold against a car title until it’s paid off.
This would only be a real problem if there were no options to buy phones direct/outright without the lock. Instead, we’re likely to end up in some situation where carriers work with phone manufacturers to implement a sort of higher-level device lock feature that stipulates the device “belongs” to the carrier and can be functionally locked (a la the stolen device lock features that currently exist) if they ever go unpaid.
