Cell phone trafficking attracts national attention

against a mobile phone trafficker. The conviction effort was spearheaded by Tracfone, a major victim in the trafficking game. The process is simple. Many prepaid phones offer starter kits, which include subsidized phones and a small helping of minutes. The idea is that future minutes will make up the cost of the phone. Traffickers, however, buy these phones in bulk, reflash or unlock them to work on other networks, and sell them around the world. So the real losers are the carriers. While we heard some rumblings of news two months ago, this story is just starting to garner national attention. Much of the problem has been concentrated in South Florida, where Tracfone has filed over half of the 39 suits over the past few months. Involvement from other national players, such as AT&T, Nokia, Motorola, and Virgin Mobile, has helped bring this issue to the national light. Some companies, though, think that what they’re doing is legal. They’re just freeing the phones from the captive binds of the carriers. If this is true, then carriers will no longer subsidize phones. Traffickers won’t be as apt to purchase a phone for full retail price and sell it elsewhere. Yet customers who actually benefit from the subsidized prices will be totally out of luck. Basically, a few companies with nothing but profit in mind are seeking to ruin a practice that is helping low-income families realize the power of cellular communication. Thankfully, in this case, the carriers are coming out ahead. Geeze, I didn’t think I’d ever say that.]]>

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2 Comments

  1. PrepaidWirelessGuy on July 14, 2008 at 3:16 pm

    Definitely a major concern, and one that I don’t believe consumers have had the chance to understand. While carriers have a lot of areas in which they can improve, they’re not out there to rip off customers, and phone subsidies are a real cost. Another angle here are distributors who sell phones for parts, or trans-ship overseas where there are compatible networks.
    Cheers,
    PrepaidWirelessGuy
    http://www.prepaid-wireless-guide.com



  2. Not So Sure on July 15, 2008 at 8:36 am

    I think the corporate argument that it means the end of subsidies is nothing but smokescreen. Getting customers locked into one carrier is so lucrative (that is to say, so screws the customer over time), that they can give the hardware away. Tracfone and others are doing everthing they can to preserve the “walled-garden” business plan, where they control the devices, content, and capabilites of your cellphone, locking to customer into their business. They abhore the idea of customers getting and doing what they want with the phones they own. Criminalizing the unlocking of phones or purchase of phones for anything the customer wants to do with them is only designed to create a lucrative business plan for the carriers, where true fairness and law should not allow them one. (Subsidizing prepaid phones is a bad business plan, we shouldn’t criminalize conduct that should be legal to make the business work.)