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Consumer Group Sues Cellphone Companies Over Locked Handsets

T-Mobile, Cingular and AT&T Wireless are accused of trying to prevent customers from switching carriers.

June 08, 2004|James S. Granelli | Times Staff Writer

A Santa Monica consumer rights group sued three major cellular telephone companies Monday, accusing them of unlawfully locking handsets so that consumers can't take their phones with them when they switch carriers.

The Foundation for Taxpayer and Consumer Rights contends in its Los Angeles County Superior Court lawsuit that the practices of Cingular Wireless, AT&T Wireless Services Inc. and T-Mobile USA Inc. are "thwarting regulations" that allow customers to take their phone numbers with them when they switch carriers.

"Handset locking is just another unfair way to lock customers into their networks," said Jordan Lurie, a lawyer for the foundation.

AT&T Wireless spokesman Art Navarro said his company was "confident that the way in which we sell handsets is not only legal but is pro-competitive and benefits consumers." But he and spokespeople for the other cellular carriers declined to address the specifics of the lawsuit.

Cingular, AT&T Wireless and T-Mobile use a network technology called global system for mobile communications, or GSM. In the U.S., each GSM carrier locks its subscribers' phones to its own system -- a practice that allows them to offer handsets at low prices.

GSM phones can be unlocked to accommodate a customer who wants to switch carriers if the old service provider is willing to provide the new one with a so-called unlock code. Then the customer can install the new carrier's Subscriber Identity Module in the phone.

SIM cards, which are used in GSM phones, contain subscriber-related data, such as a personal phone list. Cingular and T-Mobile say they offer ways to unlock the handsets so that users can install a new SIM card.

Cingular spokesman Tony Carter said the locking feature was designed so that "we are not subsidizing competing companies" by offering deep discounts on phones that customers will take with them to other carriers. Handsets cost Cingular $125 to $425 each, but it offers those phones to long-term subscribers for less -- even for free -- and writes off the difference as the cost of acquiring customers.

AT&T Wireless, which is being acquired by Cingular Wireless, is the most stringent in requiring phones that work only on its network, according to the lawsuit.

Verizon Wireless and Sprint PCS networks utilize a different technology that doesn't include interchangeable SIM cards.

The foundation has lawsuits pending against Nextel Communications Inc. over billing statements it claims are misleading and against Cingular for alleged failure to provide promised services.

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