Verizon is taking an extra step to protect its phones.
The nation's largest wireless carrier said Monday that it would begin locking the phones it sells to consumers, which will prevent them from using a SIM card from another carrier. Initially, the phones will be unlocked as soon as a customer signs up and activates the service. But later in the spring, the company will begin the practice of keeping the phone locked for a period of time after the purchase -- in line with the rest of the industry.
Verizon said it's doing this to deter criminals from stealing phones, often on route to retail stores or from the stores themselves. Unlocked phones make attractive targets because they can be resold on the black market or used overseas with different carriers. That's particularly the case for iPhones, which are a top target for thieves because of their high resale value.
"We're taking steps to combat this theft and reduce fraud," Tami Erwin, executive vice president of wireless operations for Verizon, said in a statement. "These steps will make our phones exponentially less desirable to criminals."
For consumers, there's little immediate impact because the phone gets unlocked immediately through a software update. But the policy change in the spring could be a hassle for customers who buy a new phone and then go overseas. One way of saving on international roaming fees is to buy a SIM card from a local carrier. If you have a locked phone, you'll need to contact Verizon to unlock the device before switching out your SIM card -- assuming the carrier will make the exception.
The move marks a broad reversal of its policy to offer all of its phones unlocked -- part of a deal with the Federal Communications Commission requiring it to unlock phones as part of its acquisition of the "C block" of 700 megahertz spectrum, which powers its 4G LTE network. One section of the deal specifically prohibits Verizon from configuring handsets to prevent them from working on other networks.
Avi Greengart, an analyst at Global Data, said the policy change appears to contradict the existing rules.
Verizon, however, argues it's still following the intent of the rule.
"This change does not impact the spirit of that agreement as it is designed to deter theft by those who engage in identity theft or other fraud," said a spokeswoman for Verizon. "It is not inconsistent with our obligations under the C Block."
Verizon declined to say whether it has contacted the FCC about the change, and the agency couldn't be reached for comment.
The move may also be a way for Verizon to protect itself from competition, with the locked phones making it tougher to switch.
"This is going to make it harder for rivals to poach subscribers from Verizon," Greengart said, noting that customers who might be looking to bring their own phone to rivals like Comcast's Xfinity Mobile's service may be deterred from switching.
Verizon wouldn't say how long the locked period will be once the policy change is made in the spring, adding only that it'll provide an update ahead of when it rolls out the policy. It also declined to provide a specific timeline. The wait period is in place to deter scammers from signing up for service using stolen identities to get a new phone and immediately turning around and selling the device.
AT&T requires you to pay off your phone and be active on your service for at least 60 days. Even then, there's a 14-day wait after you make your request. Sprint also requires that you have paid off your phone and wait 50 days, though the phone is automatically unlocked. T-Mobile has the same paid device requirement and a 40-day wait period, but will offer to temporarily unlock the device sooner for travel.
Even after the change, Verizon will continue to unlock the phone regardless of whether it's paid off. The company will also still accept unlocked phones from other carriers.
The policy change also brings back the issue of smartphone theft. The CTIA wireless trade group, wireless carriers and phone makers banded together to add antitheft tools to phones in 2015. A study conducted by fraud and theft data provider Recipero in 2016 found that 5 percent of devices offered for sale or trade-in at retail were reported lost or stolen, while 4 percent of warranty claims were made on lost or stolen phones. Data from from cities like New York and Washington, however, suggest the overall trend of theft is on the decline.
Verizon said armed robberies were up more than 200 percent in 2017 over the previous year.
"This is an industry problem which becomes a Verizon problem because our phones have been unlocked all the time," Erwin said in a follow-up statement. "Just this weekend, four armed, masked men, stormed into one of our locations and held employees at gunpoint as they loaded phones from our inventory into a truck. We need to protect our employees from criminals with guns and protect customers from criminals who try to use their identities to fraudulently purchase phones."
First published Feb. 12, 5 a.m. PT.
Update, 9:20 a.m. PT: To include a new response from Verizon. Update, 10:35 a.m. PT: To include a comment from an analyst. Update, 2:17 p.m. PT: To include additional response from Verizon.
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