How carriers get away with 'locking' the iPhone

Angry about carrier software locks on the iPhone 4S? You're not alone. But unfortunately there's not much you can do about it. In this Ask Maggie, CNET's Marguerite Reardon explains why.

The software locks that wireless operators put on devices, such as the iPhone, may violate state and federal antitrust laws, but there isn't much consumers can do about it.

In this edition of Ask Maggie, I answer a reader's question about whether consumers could sue their carriers to force them to allow people to take their iPhone 4S to any carrier they want, given that this particular phone uses the exact same hardware on every carrier. And I explain why consumers aren't likely able to sue AT&T over its new policy to restrict the Apple FaceTime to certain subscribers on its Mobile Share plans.

Can you take a wireless carrier to court?

Dear Maggie,
I have followed your articles and read all your responses concerning the locks carriers put on iPhones making them virtually impossible to use with other carriers, even within the SAME carrier (Sprint and Virgin Mobile) or even between 4G LTE networks, as to be expected with the iPhone 5.

When and who is going to take the cell phone carriers to a class action lawsuit to break these actions? It looks like there are several provisions in laws that describe and demand an open market and competition for customers to choose. How can this violation exist and continue like this when millions are involved?

I am almost in disbelief this situation has not been brought to the attention of regulators and/or Federal bureaus that are supposed to protect open competition.

Thanks for your time,
Hans

Dear Hans,
I've got some bad news for you. Thanks to a 2011 Supreme Court decision AT&T vs. Concepcion, consumers no longer have the right to file class action lawsuits against wireless carriers. So that option isn't available to you now.

But that's not to say that you couldn't have made a case for antitrust violations. You aren't the only one who thinks locking an iPhone to a particular carrier is anticompetitive. In 2007, there were a few cases filed in state and federal court, each citing the Sherman Act's prohibition on monopolization. The case that got the furthest was filed against Apple and AT&T in United States District Court for the Northern District of California. In the complaint, the plaintiff said that the companies violated the Sherman Act because he was unable to switch carriers or change SIM cards without losing improvements to his iPhone. On July 8, 2010, the case was affirmed for class certification.

But the road to victory was cut short. Several months later on December 9, 2010, the court ordered a stay on the case, as it awaited the Supreme Court's decision in AT&T v. Concepcion. And in the spring of 2011, the U.S. Supreme Court ruled in favor of AT&T, which meant that the clause in its contract, limiting consumers to arbitration instead of class action met the basic standards of fairness.

Due to this ruling, the class-action case against Apple and AT&T died, because the highest court in the land killed the option of suing as a class action.

"As a result of the Concepcion case, it is essentially impossible to sue a U.S. cell phone carrier in a class action," said Michael Aschenbrenner with Aschenbrenner Law in Chicago. "Consequently, there is no effective check on the power of U.S. wireless companies."

Aschenbrenner, who specializes in consumer protection law, went on to say that if it hadn't been for the Concepcion decision, consumers could potentially invoke a variety of laws against Apple and the U.S. wireless carriers, including antitrust law and other consumer protection laws.

"But as it stands, consumers are out of luck unless they wish to pursue individual cases in small claims court or in arbitration," he said.

Since Apple does sell an unlocked version of the iPhone, it seems like the fight now is more with the carriers who enact policies where phones are locked to their network. In April, AT&T said it would unlock an out-of-contract iPhones for use on any GSM network. But iPhones activated on AT&T cannot be unlocked to operate on a CDMA network, like Verizon's or Sprint's. And as I mentioned in my previous story, Verizon and Sprint do not unlock their phones to be used on any other CDMA or GSM network in the U.S., even though the iPhone 4S they sell includes the same hardware and network technology found in iPhone 4S's sold by their competitors.

As Aschenbrenner points out, consumers could try suing their carrier in small claims court or they could go to arbitration over the issue. But the result won't mean that consumers will finally be able to use any device on any network. That said, they may be able to get out of their contracts early without paying a penalty. But in the end, the carrier won't have to change its anticompetitive behavior.

The only way now that I see carriers being forced to do such a thing is if the FCC made device interoperability between networks without software locks mandatory, or if Congress passed a law to require it. But I don't think that either of those things will happen. And now with 4G LTE technology coming out, I think it's even less likely. Device interoperability is likely to become even more complicated with 4G LTE, due to the fact that carriers are using incompatible slivers of spectrum.

I've written about the AT&T vs. Concepcion case previously . So you can check out my story explaining the case and why I think it has stripped consumers of an important protection.

Can I sue AT&T for a Net neutrality violation?

Dear Maggie,
I've read about how AT&T is restricting the FaceTime app on the iPhone to people on its Mobile Share plans. I think this policy is really unfair. I've heard that the policy may violate Net Neutrality. I'm an AT&T iPhone user, could I sue the company for forcing me into one of these plans if II want to use FaceTime?

Thanks,
Mo

Dear Mo,
You are correct that some people are saying that AT&T's new policy to restrict use of FaceTime to its Mobile Share customers may violate the FCC's Open Internet (Net neutrality) rules. But unfortunately this doesn't mean you can sue AT&T, said Michael Aschenbrenner of Aschenbrenner Law.

"Whether or not AT&T is violating the Open Internet rules, consumers can't take the fight to court," he said. "Instead, consumers can take the fight to FCC."

For one, he said that the AT&T vs. Concepcion case, which I cited in the previous answer, would likely thwart any attempt to fight AT&T in court. And the other reason is that the enforcement part of the Open Internet rules allow for consumers to file formal complaints with the FCC. But it doesn't necessarily allow for consumers to file lawsuits in court, Aschenbrenner said.

"Ultimately, the FCC is the enforcer of Open Access rules, not consumers," he said. "I wish I had better news for your readers, but when it comes to consumer protection, the law currently favors businesses and disfavors consumers."

I hope that answers your question.

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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