AT&T gains latest victory against cell phone traffickers

One issue which deeply affects the prepaid cellular industry is the presence of mobile phone traffickers. While they’re not moving narcotics in and out of the country, they’re certainly undermining a system which has proven — if not beneficial, then at least preferable to consumers. Big box retailers like Wal-Mary have prepaid phone packages, which are normally very cheap. This is because the company subsidizes the cost in hopes that they make back the money as the user buys more minutes. However, when traffickers buy these packages and bulk, unlock them, and resell them for a profit, the carrier takes a hit. Enough hits, and the system goes kaput. We’ve seen a number of carriers take on these traffickers lately, the most recent of which is AT&T, which just won four injunctions against traffickers.

Judy Cavalieri, vice president of marketing and head of AT&T’s prepaid phone products, puts the issue in perspective: “Prepaid handsets provide a viable, affordable option for customers who choose not to purchase a postpaid plan. We’re able to offer these GoPhone handsets at such great discounts only if they’re used as intended on our network.”

The Digital Millennium Copyright Act explicitly allows for phones to be unlocked by users, but only with the intention of connecting it to another cell phone network. While traffickers’ intention is for the phone to eventually connect to another network, it’s not direct. In other words, if they were unlocking them for personal use, that would be one thing. But to buy them in bulk, at or below cost, and resell them at a profit is not kosher, at least in the eyes of the law.

AT&T has so far obtained 15 permanent injunctions. We’ve seen Tracfone especially harsh on traffickers. They’ve even taken out ad space to further the cause.

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2 Responses

1. Peter Kent Says
   

   Tracfone gets turned on going after phone unlockers/traffickers. This is a HUGE problem in the UK where they are known as “Box Breakers”. At one time, it was estimated a full 40% of prepaid phones in the UK were being bought and resold by these Box Breakers.

   Phone unlocking will be up for extension/renewal/review in October of this year when the DMCA exemption for phone unlocking first implemented in 2006 making phone unlocking legal in the US will run out…

   I hope they allow us to keep this freedom. Injunctions, court cases and lawsuits or not ….

   
   Posted on July 25th, 2009 at 5:45 am
2. Mike Freeman Says
   

   All prepaid carriers do not feel the same about unlocking or flashing. Metro PCS and Cricket, companies that made a big push to allow other carriers cdma handsets to be flashed to their networks along with Houdinisoft are for keeping things open.

   A lot of Att and Tmobile gsm mvnos allow the use of unlocked gsm phones via sim only kits.

   Iphone has made jailbreaking and unlocking a household word.

   It is fortunate not every company wants phone freedom stamped out. The problem is when they lump individuals in with the phone traffickers.

   
   Posted on September 17th, 2009 at 2:25 am

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