Network Locked Phones To Be Banned
New Legislation will ban operators from selling locked handsets
This week it was reported in Mobile News, the long-established trade journal for the mobile industry, that Ofcom will be cracking down on locked handsets with their sale being banned from December 2021. This has been largely hailed as a positive move for the industry.
The ruling affects EE, Vodafone and Tesco Mobile, with players such as O2, Three and Virgin Mobile already voluntarily implementing the sale of unlocked handsets in recent years.
Industry experts and analysts broadly agree that the move provides further favour for consumers as part of Ofcom’s drive to be a progressive regulator, allowing for choice, and forcing the networks to engage in competitive pricing and proactive efforts to maintain strong customer service.
However, some industry veterans believe that the ruling takes too binary a view of handset locking, as well as being an overreach on the part of the regulator that gives customers too much power to game the system and commit fraud.
The move was largely expected from Ofcom, and also follows the regulator’s introduction last year of ‘text-to-switch’, which allowed consumers wishing to change operators to text a number and receive a porting authorisation code (PAC). They can then pass this on to their new provider to keep their number.
The new ruling is “not something that comes as a great surprise”, says CCS Insight’s director of consumer and connectivity Kester Mann.
“In some ways, you wonder why it hadn’t happened some time ago – and it’s certainly consistent with Ofcom’s efforts to make switching provider a lot easier. We’re at a stage where churn is very low and people haven’t found it easy to switch providers, so this is a good move for Ofcom.”
Graystone Strategy managing director James Gray, who has directorial experience at MVNOs, says the ruling will clear up confusion for consumers.
“When I’ve sat in on customer calls, people don’t understand why the handset’s locked,” he says. “It drives confusion. Ofcom said about half of people had trouble trying to unlock their phones, and that would certainly be borne out by my operational experience.”
Changing behaviours in contract models
Whilst much of the focus of this report was based around benefit for consumers, we must single out business customers amongst this and how this will also give company mobile contract managers greater freedom when negotiating contract renewal options. With so many more businesses needing to separate out the handset form the airtime in order to meet an increasingly complex mix of models this will make things a lot easier.
In today’s workplace many businesses are having to manage BYOD schemes, SIM only contracts where the employee uses their own handset, but the company just pays for the airtime, or a situation where a mix of networks and handset solutions are needed to meet geographical coverage requirements or specific handset tech for a particular job role. Here at CAN Solutions we are seeing a greater move to taking out separate hardware SIM Free lease plans and airtime contracts, so not being tied to a network locked handset will be much easier for businesses who want to keep some or all of their handsets and switch networks.
Operator reaction
If the providers that need to comply with the ruling have any complaints, they haven’t voiced them, merely pledging their commitment to working with Ofcom to fulfil their obligations.
Neither have they revealed the money they make on charging for unlocking, making it unclear how much the ruling will affect the bottom lines of EE, Vodafone and Tesco.
The fact that O2, Three and Virgin have already voluntarily implemented the selling of unlocked handsets without any major business disruption should help put minds at rest. If anything, it’s the providers that can no longer tout an unlocked handset as a USP that must now work harder to be competitive as customers eye more readily available choices of device and data.
Telco leaders to offer a comment on the ruling include Three CEO Robert Finnegan and O2 CEO Mark Evans, who was effusive in his praise – viewing it as long overdue for a changing market.
“We fully support Ofcom’s decision,” Evans said. “At O2, we started selling unlocked handsets to customers a number of years ago, and we still maintain the best loyalty in the industry.
“Offering value and flexibility is a much better way to win trust, and as an industry we should be working to give customers the best of both.”
“It certainly works in the customer’s favour in a market with a lot of good value-for-money deals, and anything that encourages switching would in theory put downward pressure on pricing,” says Kester Mann of CCS Insight.
While this year has shown that an awful lot can change in 12 months, it’s clear that EE, Vodafone and Tesco have plenty to consider – although it’s unlikely they can do anything to fight the decision if they want to. All in all, another win for the consumer.