FCC says Verizon can lock phones to its network for 60 days after purchase

The Federal Communications Commission has granted Verizon permission to keep newly purchased phones locked to its network for a period of 60 days. As a result, the leading US carrier says it will soon do exactly that, claiming it’s meant to prevent fraud and identity theft. “After the 60 day period the phones will unlock automatically,” said Ronan Dunne, executive vice president at Verizon. “That means, fraudsters who order and steal phones — clearly with no intention of ever paying for them will have a much harder time.” Verizon plans to implement the 60-day lock “very soon.”

If you’re wondering why Verizon needs this permission in the first place, it dates back to the FCC’s 2008 auction of 700MHz spectrum, which saw Verizon come away with the prized “C block.” The rules of that transaction required Verizon to unlock the phones it sold for use on any carrier that devices could support. Ever since, Verizon has adhered to the policy and, as a result, has been less restrictive than AT&T, T-Mobile, and Sprint. Those other carriers each lock new phones to their networks either for a set length of time, until a device has been fully paid off, or both.

“We agree with Verizon that strict compliance with the unlocking requirement is inconsistent with the public interest because it facilitates and may even encourage fraud,” the FCC’s Donald Stockdale wrote in yesterday’s filing. “The harms associated with identity theft and related forms of handset fraud are significant.”

Verizon claims 7,000 of its customers were affected by identity theft in 2018, which is a 46 percent increase from 2017, and it says handset fraud cost the company $190 million last year. That prompted it to ask the FCC to reach this decision back in February. Verizon’s numbers were enough to convince the FCC that a 60-day lock period is acceptable, despite objections raised by T-Mobile. Verizon’s competitor said the requested waiver would “eviscerate” the unlocking rule. The FCC disagrees and lays out its reasoning here:

This limited waiver will not undermine the underlying policy objectives of the handset unlocking rule and will, in fact, better serve the public interest. The locking rule was adopted to enable consumers to migrate from one service provider to another on compatible networks. Allowing handsets to be locked for 60 days will not interfere significantly with this policy objective. Verizon indicates that only “a tiny fraction” of its customers port their numbers or change carriers within the first 60 days of service and that those who do change carriers usually return their handsets to Verizon within the 14-day return period. Accordingly, we agree with Verizon that a temporary 60-day lock will not have an impact on an appreciable number of Verizon’s customers, nor will it have a material impact on their ability to switch carriers.

By giving Verizon the thumbs-up for its limited waiver from the C block rules, the FCC is mandating that Verizon automatically unlock phones after 60 days — even for devices that are still on payment plans and even if a customer doesn’t specifically request it. The one exception here is fraud: if Verizon determines a phone was purchased fraudulently, it can keep the device lock in place.

“We find that the limited 60-day waiver that we are granting herein is a reasonable and balanced approach that will help Verizon combat device theft and fraud and will have only a minor impact on consumers,” Stockdale wrote. Verizon didn’t get everything it wanted, though: the FCC denied its request to declare that the handset unlocking rule already permits temporary locking policies such as this.