Corruption Showdown: Verizon, SpaceX Square Off Over Cell Phone Unlocking

from the the-lobbyist-with-the-most-money-wins dept

Earlier this year I noted how the Trump FCC, at the direct request of wireless phone giants, destroyed popular phone unlocking rules that would have made it easier and cheaper to switch wireless carriers. The rules, applied via spectrum acquisition and merger conditions after decades of activism, required that Verizon unlock your phone within 60 days after purchase so you could easily switch to competitors.

Verizon, as I’ve long established, hates competition, and early last year immediately got to work lobbying the Trump administration to destroy the rules (falsely) claiming, without evidence, that the modest phone unlocking requirements were a boon to criminals and scammers. Since the rollback they’ve slowly been making unlocking more annoying, hoping a slowly boiled frog approach would keep it on the down low.

Enter one of Trump Corp’s other biggest constituents: Elon Musk and Space X.

I’ve already explained how the SpaceX IPO includes all sorts of fantastical claims related to Starlink (the only profitable company in the prospectus). Musk Corp insists Starlink will grow extremely quickly from 10 million current subscribers to 300 million. As I explain here that’s simply not happening, for a long list of reasons authoritarian pump and dumpers don’t actually care about.

But there’s an interesting wrinkle: to grow, Musk’s Starlink is hoping to increasingly tether Starlink to existing cellular providers. Starlink has increasingly partnered with companies like T-Mobile to extend connectivity for customers when they’re outside of the range of traditional towers.

So in a filing last month sent to the FCC, SpaceX joined a bunch of other smaller providers in pushing the FCC to adopt a new 180 day phone unlocking rule:

“…we write to urge the Commission to adopt a clear, uniform requirement that mobile devices be automatically unlocked within 180 days after activation. Automatic mobile device unlocking is essential to protecting consumer choice, promoting competition, and lowering costs in the mobile marketplace. Allowing a “lock period” of 180 days gives providers enough time to protect against the significant fraud concerns identified by the FCC and to ensure mobile devices are not exploited for criminal acts.”

So for one thing, the 180 day locked phone rule would be much worse (and far friendlier to giants like Verizon) than the 60 day lock window the Biden FCC proposed (but never actually implemented because our regulatory structures are too corrupted to function). You’d also have to doubt whether Brendan Carr, who largely supports big telecom positions across the board, would ever enforce them.

Another point of note is that the FCC’s claims that they had to destroy unlocking rules to “fight crime” are bullshit. They’ve provided zero hard evidence to support that idea. The destruction of unlocking rules was just blatant regulatory capture in service to Verizon lobbyists, using “crime” as flimsy justification.

Still, it’s interesting to see SpaceX suddenly on the other side of the table to Verizon in support of something that could, for once, actually help people.

Musk Corp appears to also have convinced three Republican Senators (Cynthia Lummis, John N. Kennedy, and Eric S. Schmitt) to send a letter to the FCC also supporting a new 180 day unlocking plan. You’ve also got people traditionally lined up against consumer rights — like former FCC Ajit Pai staffer Evan Swarztrauber — suddenly writing op-eds in favor of phone unlocking.

Swarztrauber crafts a bizarre alternate reality in his op-ed where Brendan Carr didn’t destroy popular unlocking rules, U.S. wireless is hyper cheap and competitive (despite his former boss Pai rubber stamping the Sprint-T-Mobile merger), and Republicans aren’t doing everything in their power to undermine internet access affordability. But he does make the correct point that arbitrary phone locks are anti-competitive:

“But mobile locking weakens all the pressure to reduce prices and improve service—and that’s by design. Reasonable waiting periods for phone unlocking to guard against fraud are fine—no one opposes that. But unlocking should otherwise be automatic once devices are paid off, and customers shouldn’t be forced to pay fees or jump through hoops to take their phones—their own property—to a competitor that could be saving them up to $1,000 annually.”

I think SpaceX simply wants to ensure its path into the cellular market expansion through partnership and acquisition, and knows unlocked phones lead to more competition. I think the sudden flood of Republican interest in phone unlocking comes primarily as a byproduct of SpaceX lobbying. I would not be surprised if SpaceX would consider a T-Mobile acquisition to grow very quickly and keep the valuation hype rolling down the road.

That said, I’d want to see the final, actual unlocking proposal before getting too excited. Republicans have historically opposed nearly every telecom consumer benefit policy that matters, their proposals uniformly include loopholes to ensure the biggest companies are well coddled, and it’s entirely possible that the finished proposal could have more than its share of bad ideas. Stay tuned.

Filed Under: brendan carr, cellular, consumers, fcc, phone unlocking, smartphones, telecom, unlocking, wireless

Companies: spacex