Unlocking Smartphones to Become Illegal Jan. 26

The unauthorized unlocking of smartphones will go from tricky to illegal Jan. 26 as a Library of Congress ruling goes into effect.

Smartphone owners wanting to unlock their devices will need to do it quickly. As of Jan. 26, the practice will become illegal.

On Oct. 26, 2012, the Library of Congress ruled on a prohibition to circumvent copyright protection systems—systems that enable a phone to run on only the network of the carrier that sold it—as outlined in the Digital Millennium Copyright Act.

The 1998 DMC Act states, "No person shall circumvent a technological measure that effectively controls access to a work protected under this title," but goes on to say that during "each succeeding three-year period, the Librarian of Congress will consult with the appropriate groups and "report or comment on his or her views."

The consequent, 69-page Library of Congress document states:

The Register concluded after a review of the statutory factors that an exemption to the prohibition on circumvention of mobile phone computer programs to permit users to unlock “legacy” phones is both warranted and unlikely to harm the market for such programs. At the same time, in light of carriers’ current unlocking policies and the ready availability of new unlocked phones in the marketplace, the record did not support an exemption for newly purchased phones. Looking to precedents in copyright law, the Register recommended that the class designated by the Librarian include a 90-day transitional period to allow unlocking by those who may acquire phones shortly after the new exemption goes into effect.

In more clear terms: If you don't want a locked phone, don't buy one—you have options—but it's not legitimate for phones to stay locked forever. Also, that 90-day transitional period expires Jan. 26.

The Library of Congress document also quotes the National Telecommunications and Information Administration (NTIA), which stated that it "does not support the notion that it is an appropriate alternative for a current device owner to be required to purchase another device to switch carriers."

The practice of locking devices has been tied to the popular carrier business model of offering subsidized devices with two-year service contracts—a practice that, to the benefit of carriers and consumers, may be falling out of vogue.

Subsiding the Apple iPhone, in particular, has been a financial burden on the carriers—Sprint had to take on tremendous new debt in order to begin offering the device. But T-Mobile, announcing that it, too, will soon begin selling the iPhone, has said that it instead plans to offer it with the option of a low monthly financing plan.

Such a plan would save T-Mobile from the upfront investment of subsidizing millions of the devices, and would offer subscribers the freedom of avoiding a two-year contract but also the high cost of buying the device outright. Apple sells the iPhone unlocked (contract free) for a starting price of $649.

AT&T executives, during a Jan. 24 earnings call, said they will be watching with interest T-Mobile's success with the strategy.

Nokia has long offered its phones unlocked, and Google, in entering the hardware game, has also circumvented the locked-phone issue, offering its Nexus 4 unlocked for $300.