Ability To Unlock Handsets Is Hardly A Market-Changing Event

We noted yesterday one potential fallout from the Copyright Office’s decision to exempt mobile phone unlocking from the anti-circumvention rules of the DMCA — prepaid provider Tracfone saying it might sue to get the exemption reversed in an attempt to protect its business model. But what’s the wider impact going to be for consumers? Despite the decision being depicted in some quarters as a “market bombshell”, it’s unlikely to have a huge impact, because it’s not as if operators are now banned from locking handsets, merely unlocking them has been made clearly legal. The biggest threat is to prepaid operators, since the sort of thing Tracfone fears — people buying their cheap handsets only to use them with another service, or export them — could grow. Subsidizing prepaid handsets is a risky proposition anyway since there’s no way to ensure customers will stick around long enough and spend enough money to recoup operators’ outlay. For postpaid customers, which make up the vast majority of the US market, customers still won’t be able to subvert the subsidies, because they’ll be locked in to a contract, while the incompatibilities of the technologies different operators use makes taking a handset from one network to another attractive or even possible in only a few cases. The reality of the situation, though, is that consumers tend to like subsidies, since they decrease the cost of mobile handsets. Those early adopters or enthusiasts that wish to buy unlocked handsets already have the means to pretty easily do so, but the majority of American mobile consumers have little interest in paying higher prices for mobile handsets, and will work with operators to accept subsidies as long as they’re offered.

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