TracFone Wireless, the largest prepaid phone service provider in the country, doesn’t like the U.S. Copyright Office’s ruling on unlocking phones, and it’s taking the government to court over it.
The U.S. Copyright Office last month granted an exemption to its rules, thus allowing for the unlocking of wireless phones for the purpose of lawfully connecting to a wireless phone network. However, “we think it was a product of a flawed rulemaking process and it ought to be repealed,” says TracFone outside counsel Jim Baldinger.
TracFone is concerned that the wording of the ruling may be misconstrued by criminals who could use it as a shield to hide behind if accused of hacking TracFone’s phones. “I don’t think the copyright office intended to protect criminals,” Baldinger says.
TracFone has been attacking an expensive problem: hackers who buy up its phones by the bundles, reflash them and sell them at inflated prices overseas. The company is working to address the problem by filing lawsuits naming wrong-doers, working with handset makers and law enforcement and employing its own private investigators. “We are approaching the problem from every possible direction,” Baldinger says.
He says he believes the company could have worked with the copyright office to craft language that would have been acceptable to TracFone and to those who support the unlocking of phones for lawful consumer purposes. But the copyright office didn’t hear them out.
TracFone sells its phones at discounted prices at places such as Wal-Mart, Target and Sam’s Club with the intention of reaping rewards from the services they sell. TracFone has asked retailers to limit sales to two phones at a time, but some people are going to great lengths to trip up the system.
In one suit, TracFone accuses Larry’s Cell of sending out e-mails encouraging people to buy as many TracFones as they can by using different check-out registers, enlisting the help of unwary shoppers or going to different retail outlets. One defendant was accused of buying 700 phones in one day. Conspirators are promised a fee, like $5, for every handset they purchase.
Baldinger says because TracFone substantially discounts its phones, people who otherwise couldn’t afford cell phone service are able to purchase them.
TracFone’s suit against the government was filed in the U.S. District Court in Florida. Defendants named in the case are Register of Copyrights Marybeth Peters and Librarian of Congress James Billington.
The U.S. Copyright Office’s ruling, which is good for three years, was good news for The Wireless Alliance, based in Boulder, Colo., which asked for the exemption as a way to cut down on the number of handsets populating landfills. The alliance and a consumer, Robert Pinkerton, had argued that locking phones contributes to unnecessary waste in landfills and hurts competition and innovation. Pinkerton is a former Siebel Systems executive who traveled extensively in 2002 and 2003 and wanted to use his cell phone across the country and in Europe and Africa without relying on phone rentals.