Is Verizon right to temp-lock their phones?

Temporary locks for all new phones released by Verizon will go into effect soon if OK'ed by the FCC. A message was released today publicly, but addressed toward the FCC, from Ronan Dunne, executive vice president and group president of Verizon Wireless. In this message, Dunne suggests that it is because of identity thieves that Verizon is requesting that the FCC allow them to lock phones to their network for 60 days after purchase.

In the message sent today, Dunne begins by identifying the bad guys – fraudsters who "oder and steal phones — clearly with no intention of ever paying for them." These phones are purchased with fake identification from Verizon, then sold "on the black market in dozens of nations around the world." Dunne mentions that they are "always working to stop these criminals who impact about 7,000 customers every month."*

*This must be the amount Verizon alone deals with per month. According to a Javelin Strategy and Research called "2018 Identity Fraud: Fraud Enters a New Era of Complexity", the total number of new-account mobile phone account frauds was up to approximately 340,000 for the year 2017.

To fight the fraudsters, Dunne said, Verizon is crossing their fingers super hard that they be allowed to add a 60-day carrier lock (SIM card lock-down to Verizon) on every phone they sell. To the average consumer, this probably seems like a non-issue. You go to Verizon and you buy a phone because you want a phone using Verizon as a carrier, right?

To explain how this 60-day lock would deter criminals, Dunne said, "We believe this temporary lock on new phones will protect our customers by limiting the incentive for identity theft." Dunne went on, "At the same time, a temporary lock will have virtually no impact on our legitimate customers' ability to use their devices. Almost none of our customers switch to another carrier within the first 60 days."

The issue here is the deal Verizon agreed to in the year 2007. Verizon attained spectrum for 4G LTE in 2007, and along with the license for this spectrum came a big set of requirements. You can take a peek at the license rules in full as hosted by Cornell – they go by the easy-to-remember name "Network access requirements for Block C in the 746-757 and 776-787 MHz bands."

The rule Verizon is referring to is in the license under 47 CFR § 27.16, letter E. The rule is called "Handset locking prohibited." In the rule, the following is included:

"(e)Handset locking prohibited. No licensee may disable features on handsets it provides to customers, to the extent such features are compliant with the licensee's standards pursuant to paragraph (b)of this section, nor configure handsets it provides to prohibit use of such handsets on other providers' networks."

So there are certainly at least two sides to the story. Rules are rules. But nobody is really rooting for the fraudsters, in any sense.

So what's to be done?

Also, yeah, the FCC will probably just be all like "oh go ahead, Verizon, and no, this doesn't have anything to do with the fact that FCC chairman Ajit Pai used to work for Verizon as Associate General Counsel." But who knows, maybe the FCC will decide to uphold their rules, and Verizon will have to find some other way to keep fraudsters at bay?