Late last week, the New York Times reported that the Department of Justice has opened an antitrust investigation into potential coordination between major telecom carriers and the Global System for Mobile Communications (GSMA), the trade association that establishes standards for mobile carriers and manufacturers. The investigation stems from a proposal being pushed by some carriers within GSMA that would restrict consumers from switching carriers with their current devices by imposing new limitations on embedded SIMs (eSIMs).
But beyond potential competition concerns, this proposal also would infringe upon well-established consumer rights. Consumers currently have the right to take their phones with them to the carrier of their choice. If GSMA adopts the proposal, mobile carriers would be able to restrict users from unlocking their phones and switching carriers. With these concerns in mind, the Center for Democracy & Technology (CDT) has joined Consumers Union (CU) and Public Knowledge (PK) to urge GSMA to reject any measure that would place new constraints on consumer rights.
What is an eSIM?
The eSIM was designed to be the successor to the SIM card, the removable circuit card within a mobile device that allows service providers to identify and authenticate users. In comparison to a SIM card, eSIM technology has two distinct advantages. First, an eSIM is physically integrated into the device and stores data on the device itself. This allows users to switch between mobile networks without physically removing and replacing a SIM card. Second, an eSIM (up to 92% smaller than a removable SIM card) occupies significantly less space within the device. As a result, manufacturers can dramatically improve smartphone features like camera sensors and battery life, and develop entire classes of connected devices that would have been substantially larger or even impractical without the use of this technology.
The GSMA Proposal
Unfortunately, some mobile carriers are lobbying GSMA to adopt a new standard for eSIMs that will allow North American carriers to lock a device to a single carrier. Given the potentially broad impact on consumers, it is particularly disconcerting that the change is being pushed through an opaque internal process with no public input or involvement. If the proposal is adopted and implemented, device owners would be effectively barred from switching carriers with their phones, even after the phone is reset.
This would represent a dramatic shift from the current standard, which allows consumers to override a carrier lock with a reset of a device or an eSIM. Moreover, the proposal would also conflict with both federal regulations and the accepted industry standards of wireless carriers. Under the triennial exemption for device unlocking in the Digital Millennium Copyright Act (DMCA), device owners have the right to unlock their phones and switch to a new carrier. This particular protection has been repeatedly renewed by either administrative or congressional action since 2006, and the Copyright Office has already recommended renewal of the exemption for another three years. But the outlined proposal would seemingly infringe upon these rights, forcing users to either bind their device to a singular carrier or buy a new phone.
Additionally, the proposal also violates the Consumer Code for Wireless Service that major carriers adopted as members of CTIA, the trade association for the wireless industry. Specifically, the code provides that carriers will unlock devices or provide the necessary information to unlock devices for customers. The proposal pushed forward by the carriers at GSMA would break that commitment.
The Bottom Line
Device unlocking protections are built upon the principle that users should be able to control the devices that they own. The carrier proposal would infringe upon these ownership rights, ultimately restricting portability and consumer choice. By precluding device owners from switching networks with their device, consumers would be locked into a singular carrier.
For example, under the current standard, a device owner traveling overseas could switch to a foreign carrier using the eSIM memory reset function and then switch back. But under the new proposed restrictions, users could be barred from switching networks with their current device, creating an undesirable scenario where consumers may be compelled to pay higher foreign roaming rates or buy a new device if their domestic carrier does not provide or partner for service overseas.
The new restrictions could also limit choice within secondary commercial markets. Consumers searching for less expensive alternatives would have fewer choices among unlocked devices under the carrier proposal. The rule also presents the possibility for carriers to re-lock a previously unlocked phone upon network activation, thereby defeating the point of purchasing an unlocked phone. Consequently, the new owner would either be unable to use their device on their desired carrier or unable to switch carriers after activation.
At least one carrier has already shown a willingness to lock eSIMs. AT&T already commits this consumer-limiting practice with its Apple iPad customers. Cellular Apple iPads feature dual SIM capability: an eSIM and a second physical SIM. Consumers are free to establish accounts with multiple carriers and select the carrier that meets their current need. However, selecting AT&T permanently locks the eSIM to AT&T only. The physical SIM remains unlocked regardless of the carrier selection. Without the physical SIM, AT&T customers would be essentially locking their previously unlocked device.
With all of this in mind, CDT, CU, and PK have asked GSMA to commit to protecting ownership rights and enabling portability. More specifically, the letter urges GSMA to (1) confirm that no standards will inhibit the ability to change carriers and (2) reject any rules that would prevent consumers from exercising those rights. We hope that GSMA will reconsider the proposal and take steps to preserve consumer rights.