Note: The following is Derek Khanna's June 6, 2013 testimony before the House Judiciary Committee regarding H.R. 1123, the “Unlocking Consumer Choice and Wireless Competition Act."
I would like to thank Members of the Subcommittee for the invitation to submit a written statement for the record. I am submitting this statement as a representative on behalf of our White House petition campaign that engaged over 114,000 Americans in support of unlocking.
First, I would like to congratulate Members of the Committee for addressing this extremely important issue that represents a culmination in our campaign with which over 114,000 people engaged. This important issue affects innovation, small businesses and ultimately impacts millions of ordinary consumers within the United States. Over the course of our campaign on this issue, the sheer ridiculousness of banning unlocking became more clear as we began to hear from more affected parties and gradually began to realize the real and measurable impact that this unlocking prohibition has had upon innovation and consumer choice. Most disturbing we have also heard of its terrible and unforeseen impact on our nations’ Service Members which I will address later.
As of November 24, 2003, wireless companies have been required to offer wireless number portability for consumers. If the phone unlocking issue is evaluated seriously and legislation actually resolves this issue and restores a free market (while protecting freedom to contract), then legalizing phone portability may have a comparable impact as mandating number portability. Permanently legalizing users unlocking and the technology to enable unlocking could be the most beneficial change in mobile policy in over nine years.
As a leader of the campaign on cell-phone unlocking, I would like to put forward a few major points to you today. H.R. 1123, the Unlocking Consumer Choice and Wireless Competition Act, is a terrific first attempt to address a portion of the unlocking issue; however, there are some important fixes which must be made to ensure that this legislation succeeds in preserving consumers' rights to property and restoring a free market.
To actually fix the problem any serious legislative fix must not only 1) legalize the personal use of unlocking technology (as your legislation does) but it must also 2) legalize tools and services which facilitate unlocking (which H.R.1123 as currently written does not authorize) and 3) it must legalize this permanently (which H.R. 1123 does not do). This recommendation is consistent with the opinion of the former FCC Chairman, current FCC Commissioner Ajit Pai, and the statement from the White House; and it is required for a serious implementation of this policy fix. There is little point in allowing personal use of a complex technology, unlocking, that is impossible for consumers to find, buy and use. It would follow that it is illogical to classify businesses that cater to this legal market as illegal businesses. Instead, if consumers can use this technology, and the technology is beneficial for the market, then the technology should be lawful to develop and sell to the consumer.
A serious legislative fix for unlocking will create regulatory certainty by permanently legalizing the technology. In present form, H.R.1123 would require the Librarian of Congress to rule again on this issue – when after our successful campaign to garner Congressional and White House support, the Librarian’s statement explains that he stands by his previous ruling. This regulatory uncertainty would inhibit innovation, consumer or business confidence and a robust legal marketplace.
The remaining Republican Commissioner of the Federal Communication Commission (FCC), Ajit Pai, issued a formal statement of his unequivocal support for unlocking through a permanent fix:
“American consumers should not face jail time for unlocking their cell phones. This should not be a matter of criminal or copyright law. Instead, it should be addressed by contract law. If a consumer is not bound by a contract, he or she should be able to unlock his or her phone. The Digital Millennium Copyright Act (DMCA), as it pertains to this issue, unnecessarily restricts consumer choice and is a case of the government going too far. Fortunately, there’s a simple solution: a permanent exemption from the DMCA for consumers who unlock their mobile devices.”
Commissioner Pai’s statements perfectly embody the principles of the unfunded campaign I have spearheaded since January. Commissioner Pai’s op-ed in the New York Times for June 6, 2013 unequivocally makes the point that the real fix requires a permanent fix and legalizing selling the technology.
Starting this campaign with a column in the Atlantic, at the time it was unclear if this campaign could have a tangible impact upon policy. But that article received over a million hits, knocking the Atlantic off-line. This viral campaign has demonstrated an overwhelming consensus in favor of fixing this problem on a permanent basis. As the White House, Commerce Department, former FCC Chairman, FCC Commissioners, think-tanks, and 114,000 average Americans have expressed – unlocking is a beneficial technology for the market. In the words of the White House and my Atlantic column, legalizing unlocking is “common-sense.”
What is unlocking?
Many people, are unfamiliar with “unlocking.” They are unfamiliar with unlocking primarily because it has been banned in the United States while it is legal in the rest of the world. This technology is not scary or dangerous. There is no reason why the technology itself should be contraband.
Smartphones today are essentially mini-computers in our pocket that we can use for phone calls and texting but also traditional computer functions including web access, e-mail, gaming, music and video consumption and the creation, distribution and consumption of a wide variety of professional office document processing. These phones are “locked” through software to block the phone from using SIM cards from other phone carriers. Unlocking is a relatively simple software “patch” where a user plugs their phone into a computer and runs a small computer program. The technology is straightforward, easy to use and patches the phone very quickly. If you have ever updated an iPhone or Blackberry by plugging it into your computer - the unlocking process is usually not significantly more complex than that simple process.
Put simply: unlocking is a quick process to allow a phone to use SIM cards from other carriers – and thereby easily use an older phone on another carrier. When we talk about “legalizing unlocking,” we are referring to legalizing use of this “patch” as a currently banned technology. Legalizing unlocking, the basis of our campaign, does not referring to any alterations to contract law, tort law or “interoperability.” Legalizing unlocking would restore the free market by removing DOJ involvement. If consumers are allowed to unlock their own phones under US law, this legal adjustment would not interfere with a phone carrier’s ability to contract with consumers and neither would it mandate that all phones be cross-compatible (interoperability). This position is consistent with Commissioner Pai’s statement.