Once Verizon began to take part in Block C spectrum with the FCC, they became subject to rules which stopped the locking of phones. This meant that if you purchased a phone from Verizon, you could potentially walk right out the door and over to an AT&T, for example, and buy a SIM card that’d work (to some degree). Now, thanks to a new waiver on the part of the FCC, Verizon is allowed to keep their phones locked to their network for 60 days after purchase.
Verizon contends that the 60-day lockdown period is in place to combat fraud. To the average internet denizen, this might seem like nonsense or some sort of unreasonable, made up, goofiness. In reality, this ruling might be the first time I agree with both the FCC and Verizon on a ruling which includes greater power for the carrier.
As the most giant smartphone service carrier in the United States, Verizon is subject to a significant amount of fraud attempts. As we discussed in our numbers rundown on this subject earlier this year, fraudsters steal thousands of devices each year. In the study “2018 Identity Fraud: Fraud Enters a New Era of Complexity” by Javelin Strategy and Research, the number of new-account mobile phone account frauds were up to 340,000 for the year 2017.
One of the most major ways in which fraud is committed is with identity theft, where a person will use a stolen ID to buy a phone, then turn around and sell it on the black market. The other major way in which fraud is committed is with what Verizon calls “first-party fraud”, where a person will buy a Verizon phone with a contract, but will never actually pay for said phone (also likely selling said phone on the black market).
In the document announcing the waver, the FCC relays the Verizon claim that “handset fraud cost the company approximately $190 million in 2018, up from approximately $115 million in 2017, and that it lost almost 210,000 devices in 2018, up from approximately 155,000 devices in 2017.”
FCC waiver time
The FCC heard these arguments and agreed that a 60-day carrier lock on all standard network phones purchased at Verizon was appropriate. This does not include prepaid phones, only everything else.
The FCC ruled that the lockdown must be automatically lifted after 60 days, regardless of if the customer asked for an unlock. The period during which the phones are locked will, apparently, allow for users to realize fraud occurred as well as time for Verizon to take action in an effort to rectify said fraud.
What’s the issue?
Besides the basic “rules are rules” argument against the FCC giving Verizon a 60-day waiver of said rules, what customers will have an issue with this lock? People who don’t want to activate their phone with Verizon? People who want to buy the phone all at once for full retail?
In both cases, why not just buy from the manufacturer? Only a couple instances occur now where Verizon has an absolute exclusive on a smartphone, and they’re most certainly not the sort of phone that a significant amount of people are looking for.
Like the Palm phone. [UPDATE: Actually Palm now sells their phone at other carriers, like AT&T and T-Mobile.] Or the Google Pixel. [UPDATE: Actually you can buy Pixel phones straight through Google, or with Google Fi.]
Verizon doesn’t sell DROID phones anymore – and the Moto Z3 works with Verizon, Google Fi, and Boost Mobile in the USA. So which phone are we looking at here? On which phones does Verizon have an unfair strangle hold?