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Cellphones Government

Chile Forbids Carriers From Selling Network-Locked Phones 291

Posted by timothy
from the as-regulations-go-not-a-bad-idea dept.
An anonymous reader writes "As from today, network operators in Chile are no longer allowed to sell carrier-locked phones, and must unlock free of charge all devices already sold to costumers through a simple form on their respective websites. The new regulation came into effect in preparations for the rollout of Mobile Number Portability, set to begin on January 16th. This is one among other restrictions that forbid carriers to lock in the customers through 'abusive clauses' in their contracts, one of which was through selling locked devices. Now if a customer wishes to change carriers he/she needs only to have the bills up to date and the process of porting the number should only take 24 hours."
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Chile Forbids Carriers From Selling Network-Locked Phones

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  • by Anonymous Coward on Tuesday January 03, 2012 @11:39AM (#38573146)

    I applaud it.

  • Great (Score:4, Insightful)

    by dintech (998802) on Tuesday January 03, 2012 @11:39AM (#38573150)

    This will increase competition between providers as consumers can move to the best deals a little bit more easily. Hopefully other countries will follow suit, but I doubt it.

  • Re:Great (Score:3, Insightful)

    by Soluzar (1957050) on Tuesday January 03, 2012 @11:45AM (#38573228) Homepage
    Customers will still be locked into a miminum of a 12 month contract if they are getting a handset at a subsidized price.
  • by itsme1234 (199680) on Tuesday January 03, 2012 @11:58AM (#38573406)

    Any unexpected (and everything is unexpected at some point) regulation is "somewhat unfair"; the provider might bet on you staying with them after you finished your contract because you don't want to lose your number but then number portability comes and then they can't keep you.
    Fact is the provider is intentionally crippling a perfectly good phone betting there will be enough people paying for their "official" unlocking service to offset all the costs associated with these procedures and even get them some extra profit.
    It's a non-zero sum game in which the "total" optimal strategy would be for the provider to just stop messing up with the phones. The problem is that market will not reach this point by itself once those 2-3 big providers sell only locked phones.

  • Re:Wow (Score:4, Insightful)

    by Kenja (541830) on Tuesday January 03, 2012 @12:03PM (#38573472)
    Unclear as to how forbidding consumers from being able to get a low cost cell phone in exchange for a carrier lock in is bad. Do you really think Chileans are going to pay the 400-600 USD an unlocked/unsubsidized phone costs? Guess what? You can buy an unlocked phone in the US right now. Apple sells them on their web site. The vast majority of people would rather pay less money for a locked phone.
  • by Anonymous Coward on Tuesday January 03, 2012 @12:18PM (#38573680)

    You might be able to do this in the U.S, but first you would have to unlock all the paid-for federal politicians.

    Based on the chances of that happening, I guess not.

  • Re:Great (Score:3, Insightful)

    by tmosley (996283) on Tuesday January 03, 2012 @12:25PM (#38573802)
    Private industry is bad at managing infrastructure?

    Then why are privately owned toll roads in such good repair? Why does our privately owned worldwide system of trade networks work so well? Why does the internet work so well? Why does cellphone service work so well? Why do private urgent package delivery services work so well?

    Why are cable monopolies such shitty services? Why do electricity prices keep rising? Why does electricity flicker in a big city like Houston? Why did sewage used to back up into my house before I moved into the country? Why to public roads have potholes everywhere, and seem to always be under construction?

    Oh, that's right, apologists for the state ignore all evidence when making their dumb theoretical assumptions.
  • Re:Carrier Subsidy (Score:2, Insightful)

    by erroneus (253617) on Tuesday January 03, 2012 @12:30PM (#38573866) Homepage

    Phones don't cost $600 and Windows doesn't cost $300. Just because party X "charges" Y for something in 'retail' things doesn't mean it's worth it or that anyone actually pays that much let alone "costs" that much to make.

  • Re:Carrier Subsidy (Score:4, Insightful)

    by geek (5680) on Tuesday January 03, 2012 @12:33PM (#38573914) Homepage

    Exactly. An Unlocked iPhone 4S costs more than an iPad 2. There is no reason for the unlocked phone to cost what it does. The price is artificially inflated to make it look like you are getting a huge amount off in subsidy.

  • by jadavis (473492) on Tuesday January 03, 2012 @12:37PM (#38573988)

    "...and must unlock free of charge all devices already sold to costumers through a simple form on their respective websites."

    You applaud retroactively changing private contracts? For extreme cases, it can be justified, but for cell phones?!

    If a country treats private contracts this way, it discourages investment in a major way.

  • Re:Wow (Score:4, Insightful)

    by petermgreen (876956) <plugwash.p10link@net> on Tuesday January 03, 2012 @12:45PM (#38574110) Homepage

    Do you really think Chileans are going to pay the 400-600 USD an unlocked/unsubsidized phone costs?

    Not all phones are that expensive you know and besides customers pay for their phones one way or another, it's just a case of whether they do it explicitly or whether it is hidden in the cost of a cellphone contract.

    I think there are two distinct but intertwined issues here

    1: allowing carriers to offer subsidised phones in exchange for signing up to a 1-3 year contract.
    2: allowing those same carriers to lock the subsidised phone so that even after the contract expires you are still locked in unless you get a new phone

    When theese two factors are both present customers are basically forced into paying for a new phone every 1-3 years whether they actually want one or not since moving carrier would mean getting a new phone and your existing carrier has little motivation to lower prices for a customer who can't move without signing up to another phone contract with hidden phone purchase plan. This is hugely wasteful as huge number of mobile phones are made that people wouldn't buy if they had to pay for them directly.

    If the government allows 1 but not 2 and assuming the phone networks are technically compatible* people can still get a "subsidised" phone but when their contract expires they can take that phone to any provider. This in turn gives the providers and incentive to offer and compete on cheaper "sim only" phone deals for the newly freed up customers. Phones will get used until people actually want/need to buy a replacement rather than being replaced on an arbitary schedule set by the carriers.

    * the US has the additional problem that it's mobile phone networks are a mess of two competing sets of standards (GSM/UMTS verses IS-95/CDMA2000) so unlike most other places even if artificial barriers to taking your phone with you were removed your options for moving would still be limited.

  • by sjames (1099) on Tuesday January 03, 2012 @12:51PM (#38574196) Homepage

    Yes. I absolutely applaud it, and so should anyone who wants a healthy market.

    As near as I can tell, the claim is that any kind of regulation, including forbidding businesses to mug people in the park to cover shortfalls is claimed to "discourage investment".

    Sometimes the public interest calls for less muggings even at the cost of less investment.

  • by Grishnakh (216268) on Tuesday January 03, 2012 @01:09PM (#38574448)

    You can't do something like this in the US. All the teabaggers and their Republican allies will say it's Communism and that government regulation is wrong. The Democrats will say a few weasel words that appear to support this, but then will either not bother to do anything at all, or will make a lame attempt at passing a law, but when a few Republicans object they'll change the law so that it looks like it's supporting this at first glance, but in reality is actually making things worse and giving giant advantages to the incumbent carriers, while also throwing in a bunch of other unrelated stuff that Republicans want. When people complain, the Dems will say they were "forced" to "compromise".

  • by slinches (1540051) on Tuesday January 03, 2012 @01:55PM (#38575088)

    I think they'd likely handle subsidized phones the same way the carriers do now, early termination fees. The reason they put the lock on the phone has nothing to do with the subsidy. It's to prevent switching to a more competitively priced plan once the contract expires.

  • Re:Great (Score:5, Insightful)

    by mbkennel (97636) on Tuesday January 03, 2012 @01:55PM (#38575102)

    "Then why are privately owned toll roads in such good repair?"

    Generally, it's because they are new and are only in good shape when they have to compete directly against non-toll roads going to the same destination.

    in sum: works well when there is strong competitive substitutability and no technical lock-in.

    "Why does our privately owned worldwide system of trade networks work so well?"

    Because they are in an industry which has strong competitive substitution, there are universal non-proprietary technical standards, and
    foremost, they are beneficiaries of huge government investments in regulated infrastructure like ports, roads, rail and airports. One tanker or container ship is as good as another.

    in sum: strong competitive substitutability and no technical lock-in.

    "Why does the internet work so well?"

    Brutal competition, and the inability to apply proprietary standards, like with shipping carriers. This is a historical artifiact of the initial investment & technology being developed by government.

    in sum: strong competitive substitutability and no technical lock-in.

    "Why does cellphone service work so well?"

    It doesn't, except where there is strong competitive substitutability and no technical lock-in.

    "Why do private urgent package delivery services work so well?"

    Because they aren't providing infrastructure, they are beneficiaries thereof.

    in sum: strong competitive substitutability and no technical lock-in.

    When the infrastructure does not offer competitive substitutability or there is technical lock-in, it is very lucrative and undesirable for private entitites to run it, without intrusive and constant regulation.

  • by Maow (620678) on Tuesday January 03, 2012 @02:08PM (#38575236) Journal

    Well, by North America, I cannot speak to the situation in Mexico.

    But in Canada & USA, one can take their unlocked phone to another carrier after a contract is over, but there is a price disincentive against doing so.

    If the new carrier offers either 1, 2, or 3 year plans, all with a new phone, or PAYG, then the incentive is to take the "free" new phone, not bring the unlocked one along. PAYG being a rip-off for anything but the most casual usage, of course.

    Until carriers in NA are forced to have plans with different prices for "free" phones vs bring-your-own phones, there will not be much incentive to switch carriers and continue using the previous phone.

    BTW, Wind Mobile in Canada will give you - for free - your network unlock code after 3 months of service. I've unlocked 2 Android phones that way. Now we can travel internationally and just plug in any cheap SIM, or switch to competition and simply get a SIM.

  • by tgeek (941867) on Tuesday January 03, 2012 @02:40PM (#38575638)
    IMHO, subsidized phones ought to go away. Hiding the true price of the phones behind carrier subsidies frees the phone manufacturers from having to price their phones openly and competitively.

    Imagine if there were no subsidized phones. Would we still have iPhones, Samsung Galaxies, HTC whatchamacallits and whatever else? I think so. Would they cost $500 or more? I doubt it - I think market competition would drive the prices down. Plus we might actually have some reasonably priced contract terms for service.

    Instead we have manufacturers who set whatever exorbitant price they like and conspire with the carriers to hide that price into locked-in contracts. PT Barnum, wherever he is, must be smiling!
  • by gl4ss (559668) on Tuesday January 03, 2012 @02:52PM (#38575780) Homepage Journal

    why the fuck you want subsidized phones?

    really? if you're poor and short on cash - then buy a fucking 40 bucks phone - they do exist, they work as phones really well. or spend 120 bucks and buy something that can run angry birds. if you can afford an expensive smartphone buy it upfront.

    OR do a proper partial payment plan for it. doing long contracts with carriers is stupidity, doing long contracts that you don't even know the terms for is greater stupidity and that's what carrier locked subbed phones are.

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