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As widely reported, CTIA responded positively in most respects to FCC Chairman Tom Wheeler’s November 14 letter requesting CTIA revise its Code of Conduct to incorporate five principles for unlocking wireless handsets, including the 3rd principle that calls for the wireless carriers to “affirmatively notify customers when their devices are eligible for unlocking and/or automatically unlock devices when eligible, without an additional fee.” The FCC “accepted” CTIA’s offer, per Chairman Wheeler’s press release.

In its response, CTIA noted that it, the four major carriers and U.S. Cellular will recommend adoption of the FCC’s principles, as restated in CTIA’s commitment letter, “for inclusion into the CTIA Consumer Code for Wireless Service (“Consumer Code”), in accordance with CTIA’s bylaws. Upon adoption, these companies will move quickly to implement these principles, committing to implement three of these principles within three months and the remainder within 12 months.”

A substantive difference between CTIA’s response and Chairman Wheeler’s letter is that CTIA proposes devices associated with prepaid plans be unlocked “no later than one-year after activation, consistent with reasonable time, payment and usage requirements.” The Chairman’s November 14 letter did not explicitly address handsets with prepaid services.

Routine unlocking (of eligible handsets) could provide a much-needed boost to the domestic MVNO market, which is just beginning to gain momentum according to Sue Marek. This optionality also supports rural carriers’ efforts to offer more sophisticated wireless handsets, as noted earlier this year by the Competitive Carriers’ Association.

Today’s smart phones and tablets can store substantial quantities of data and host countless apps, creating an incentive for persons to hold on to and use their devices for more than the standard two-year replacement cycle.   As enhancements in future releases of popular handsets become less substantial, lower-priced, prepaid plans could become far more compelling.

As compared to other countries, the MVNO market in the United States today is relatively underdeveloped, notwithstanding TracFone’s noteworthy success.  From a policy perspective, a robust MVNO market could provide more meaningful opportunities for firms lacking the resources of Dish or Google to compete effectively with the major facilities-based wireless carriers (regardless of whether Sprint and T-Mobile eventually merge).