Why cell phone locks and required data plans are unfair

In this edition of Ask Maggie, CNET's Marguerite Reardon answers questions about device unlock policies for consumers who travel abroad and why a smartphone used only for voice and text messaging needs a data plan.

Aside from monopolistic cable providers that force their customers to buy expensive bundles of TV channels they might never watch, wireless operators may be the only other businesses I know of that often force their customers to buy expensive services they don't really want.

In this edition of Ask Maggie, I answer two questions from readers who highlight this point. In the first question, a reader asks if he can avoid hefty international roaming fees by getting his brand-new Samsung Galaxy S4 phone unlocked so that he can use a foreign carrier's wireless service while he is abroad in Spain for the summer. He also asks if he can really get 4G service in Europe.

In the second question, another reader wants to know why he is being forced by his carrier to pay for a data plan for a smartphone that is only used for text messaging and voice calls.

While mobile operators might argue that these policies help protect their investment in building costly infrastructure to offer these services, the reality is that they have these policies, because they can. The more services they can force you to buy, the more revenue they generate.

How irksome cell phone locks cost you money

Dear Maggie,
I'm a college student, and I'll be studying in Spain this summer. I'm ready for a new smartphone upgrade this month. And I'd like to get the new Samsung Galaxy S4. I was wondering if I will be able to get my new phone unlocked so that when I go to Spain for the summer, I can use a Spanish carrier's SIM card instead of AT&T's international plan. Do you have any advice for me? Also, I want to know if I replace my AT&T SIM with a 4G SIM card from a Spanish carrier if I can still get 4G speeds.

I appreciate your help.

Thanks,
Henry

Dear Henry,
The first thing you should know is that if you buy your new Samsung Galaxy S4 from AT&T and you get it for the subsidized price, you won't be able to get your device unlocked for your trip. If you are under contract with AT&T and you have not paid the full price of your device, AT&T will not supply the unlock code.

Amanda Kooser/CNET

This policy on device unlocking has changed in recent years. As a longtime AT&T customer myself, I have been able to get devices unlocked to be used overseas while still under contract. But now AT&T's policy states that this not the case.

So unfortunately for you, if you want to use this phone while you are traveling in Spain, you will have to sign up for AT&T's international roaming plan. The plan offers you a slight discount on voice calls and text messages. And you can buy buckets of data, which also offer a discount as opposed to paying for data by the megabyte. But in general, these international plans are pricey. And since you will be in Spain for the entire summer, you will likely spend more money using one of these international plans than if you used a local SIM card from a Spanish provider.

One way to get around this issue is to buy your Samsung Galaxy S4 at full price. Of course, this isn't ideal since a new Galaxy S4 will cost you about $640 from AT&T. One thing to keep in mind is that if you buy a full-price Galaxy S4 from AT&T, it will still have a lock on it. Even at full price, the device is made specifically for AT&T. And unless you ask for the unlock code it will be locked when you buy it. This means, you will have to ask AT&T for the unlock code for that device. But since it's paid for, AT&T should provide you with this code without a problem.

You could also try buying an unlocked international version of the phone on eBay or Amazon. But it will likely cost you even more -- $700, $800, or even more. And it may be difficult to get your hands on one since the unlocked international versions of the phone are selling out quickly online.

This is the main reason why I think it is ridiculous that carriers are allowed to lock their devices and refuse customers the ability to unlock their phones for use on another carrier's network. This issue of locked phones versus unlocked phones was highlighted earlier this year when the Library of Congress refused to exclude cell phone locks as part of the antipiracy law that protects copyright.

As a result, unlocking a device without the carrier's permission is now illegal . Most of the major operators, including AT&T, say they will unlock a phone once it's paid off. And all the legislation I've seen proposed to solve this problem also suggests consumers should be able to unlock their phones once they're paid in full. But no one seems to see the practical problem this presents for people who travel. It seems unfair and anticompetitive to refuse a wireless subscriber the option of using a dramatically less expensive alternative to his carrier's international roaming plan.

As for your second question: Will the Galaxy S4 operate on a 4G wireless network in Spain? It depends on what you consider to be "4G." There are no carriers in Spain offering 4G LTE right now. LTE is considered the fastest 4G wireless technology available today. While European carriers plan to deploy LTE in the future, right now most support HSPA+ technology. This network technology is capable of offering network speeds that can be similar to an LTE service. This is why AT&T and T-Mobile also call this service "4G." AT&T, which has deployed LTE, also has HSPA+ technology in its network.

For the most part, when people talk about 4G, they mean LTE. So the short answer to your question is a simple no. You will not get 4G service in Europe. But you may be able to get similarly fast speeds.

Even if European carriers offered LTE today, the Galaxy S4 would still be unable to roam onto those networks. Why? The radio frequencies that U.S. carriers are using for LTE service are not the same as the frequencies carriers in Europe plan to use. As a result, a phone designed for AT&T's 4G LTE network will not be able to access another LTE network unless the device includes the same spectrum support.

Since AT&T won't unlock your new Galaxy S4 unless you pay full price for it, what should you do? First of all, I don't think it's worth it to buy the Galaxy S4 at full price just so you can use it abroad with a foreign SIM. My advice is before you upgrade to the Galaxy S4, get your old smartphone unlocked. If you are out of contract, which it sounds like you are, and you're a customer in good standing with AT&T, this should not be a problem. I'd use the older, unlocked smartphone while in Spain instead of the new Galaxy S4. This way you can put a Spanish SIM card in your unlocked phone and you'll save yourself some more money. If you still want to buy the Galaxy S4 before you leave, go ahead. You can always put the device on airplane mode and use all the Internet-enabled features and apps when you are in a Wi-Fi hot spot.

I hope this advice was helpful. Good luck with your summer semester abroad!

Why is AT&T forcing me to pay for a data service?

Dear Maggie,
Almost three years ago, I bought an iPhone 3GS with a new two-year contract from AT&T. It came with a $30 unlimited data plan. My two-year agreement ended in June of 2012. I bought the new iPhone 5 in October and kept my old unlimited data plan.

I gave my old iPhone to a family member, and I added her to my plan for an additional $9.99 per month. She just put her old SIM card from her flip phone into my old iPhone. She still only uses her phone for voice calls and text messaging. She does not use any data, unless she is in a Wi-Fi hot spot.

For over a year, AT&T didn't charge me for data on the iPhone 3GS, because that line didn't use data. But then a few months ago AT&T charged an extra $30 on my monthly bill. I contacted customer support, and I told them that the old iPhone 3GS doesn't use data. They refunded my $30.

A month later, the same thing happened again. I contacted customer support, explained the situation, and they refunded me my $30. But this time the representative said that was the last refund for me. And she said that AT&T would start charging me for data every month even though this iPhone 3GS doesn't actually access any data.

My question to you is, why is AT&T able to charge me for this data when this phone isn't actually using the data service? It doesn't seem fair to me.

Thanks,
Jason

Dear Jason,
I agree with you a 100 percent that this is not fair. But unfortunately, it is AT&T's policy. And it's the policy of just about every wireless carrier on the market. They all require smartphone customers, regardless of whether they enable the cellular data function on their device or not to purchase a data plan.

The reason why is simple: This is how AT&T and other carriers make money. They do not make much money on voice calling or text messaging anymore. Data is where the money is. And they will do what they can to make sure every wireless subscriber is paying for data. You have to remember the overall goal of a wireless carrier is to get consumers to spend more each month on services. With wireless penetration well above 90 percent in the U.S., this is one of the only ways an operator can grow revenue. Sprint CEO Dan Hesse said as much during the company's most recent earnings call.

A wireless carrier might argue that it's only fair to ask all smartphone customers to chip in the full price of a data plan since it costs billions of dollars to build these networks. Operators may also argue that it only makes sense to force subscribers to sign up for a data plan if they have a smartphone, because the phone is designed to do much more than make phone calls and send text messages. But the reality is that for frugal consumers, using a hand-me-down device and accessing the Internet only when in a Wi-Fi hot spot is a much more affordable way to use a smartphone.

This approach doesn't offer ubiquitous access, but for some people, it works just fine. It sounds like that's the case for your relative who inherited your iPhone 3GS. If you are interested in a less expensive option and your family member only wants to use data in a Wi-Fi hot spot, you may want to check out some prepaid options that offer this type of service or can at least offer you a less expensive monthly plan.

Republic Wireless may be a service to consider. It has a $19-a-month plan that offers unlimited talk, text, and data. The company actually uses Wi-Fi networks throughout its coverage area to offer the data service. The only downside for you is that your relative would have to buy a new phone. And right now, the handset choices are very limited.

Sorry I don't have better news for you. Good luck!

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.

 

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