What Do Cellular Phone Unlock Laws Mean for Recommerce?


Cellular phone unlock laws have got to be among the most confusing topics in consumer electronics these days. What are the differences between a locked and an unlocked phone? What do these stipulations mean for your current phone, and how difficult would it be to switch providers? What phones can even be unlocked?

We’ve got the answers for you here.

Locked vs Unlocked

In short, a locked phone is a device that’s “locked in” for use with its current provider. Thanks to a line of code on the device, it can only be used with a SIM card from the provider who put the code there. Unlocked phones, on the other hand, can use SIM cards from any provider, and, at least theoretically, make it easier, for example, to switch from AT&T to Verizon.

But There’s a Catch

Because here’s where things get complicated. As this CNET article explains, there are two types of cell phone networks: GSM, a standard used by most operators around the world, as well as AT&T and T-Mobile in the US, and CDMA, a standard used by Verizon and Sprint in the US, along with some providers in Latin America and Canada. Switching providers on an unlocked phone is no problem if they’re on the same standard. Jumping between the standards, however, can become problematic—and in some cases it’s impossible.

A Solution Is on the Horizon

A new, international standard is trying to alleviate the problem of varying standards. You may know it as LTE, Verizon’s 4G solution that promised (and delivered) faster Internet and data speeds. LTE is currently developed for voice transmission as well; once instituted, this should alleviate many of the problems mentioned above. That’s because it’s compatible with both GSM and CDMA, and works with SIM cards of both standards.

But here’s the best part: thanks to a provision by the Federal Trade Commission, which challenged Verizon to allow “open access” to the 4G LTE network, all 4G devices by the provider after the Samsung Galaxy 3 come out of the box unlocked. No more pesky software code that needs to be removed, or frustration when switching from Verizon to AT&T while keeping your device. Instead, we’re moving closer to a world in which the device is independent of the provider.

Endless Possibilities for New Revenue Streams

Here’s the kicker for any company interested or participating in recommerce efforts: the almost unlimited possibilities in the breaking of network barriers. Previously, it was difficult-to-impossible for American businesses to buy back Verizon phones and resell them to international consumers whose providers operate on a different standard or vice versa. If the trend continues, buyback programs will become a lot more attractive to businesses looking to preserve the environment by reducing waste, all while making stellar profits from the consumer trade-in market. In other words, it may be time to jump on the recommerce bandwagon! Contact us today to see how your business can benefit from this lucrative opportunity.

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Matthew Roldan

Matthew is the Co-Founder & Chief Customer Officer at Sourcely. He has owned and operated several small businesses and has helped 1000's of SMB's find success online while working as a consultant for GoDaddy.com.