Obama Supports Your Right to Unlock the iPhone
Few consumers are aware that it is technically illegal to unlock an Apple (NASDAQ: AAPL) iPhone, a Samsung Galaxy S III or any other cellular device. The problem started last year when the Copyright Office of the Library of Congress failed to provide a key exemption to cellular devices (which it had done for the past several years), creating a ban on the unlocking process.
According to The New York Times, this could soon change now that the Obama administration and the Federal Communications Commission are urging Congress to change the law.
Ironically, the Library of Congress -- which revoked consumers' freedom to unlock their smartphones last year -- now supports the view of the White House and the FCC. If the Library of Congress had simply renewed the exemption last year, the problem would have already been solved (for a few more years, at least).
If Congress votes to permanently allow consumers to unlock their smartphones, The New York Times speculates that it could lead to more competitive prices. Consumers would be free to leave their carriers -- and take their phones with them -- as soon as their current contract comes to an end.
This sounds like a win-win for consumers, but Sprint (NYSE: S), Verizon (NYSE: VZ) and AT&T (NYSE: T) should not be underestimated. They know how to navigate legislation and competition to maximize profits.
While Sprint is the only carrier that offers a truly unlimited (and un-throttled) data plan, the company tacks on a $10 monthly fee to everyone who signs up. Thus, the $79.99 advertised price quickly turns into $89.99.
AT&T, which offers the most expensive data plan available for the iPhone ($230 for 20GB of data), attempted to block subscribers from using FaceTime over cellular unless they switched to a shared data plan. The carrier backed down and reversed its stance after three consumer rights groups filed a complaint with the FCC.
Verizon has its own way of nickel-and-diming consumers. For example, those who choose the cheapest iPhone plan ($80 a month) will receive a mere 300MB of data. When subscribers go over the limit, they will be charged an additional $15 for every 300MB they use. If they switch to the $90 plan, however, the $15 fee will buy another 1GB of data. This is the company's way of encouraging consumers to avoid the cheapest data plan.
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