America’s biggest telecom company can now save hundreds of millions of dollars as FCC takes U-turn on smartphone unlocking rule

The Federal Communications Commission (FCC) has good news for America’s biggest telecom company, Verizon. According to a report by the news agency Reuters, the US agency has reversed its smartphone unlocking rule for Verizon.

This policy shift will allow the company to save hundreds of millions of dollars. This move comes after the previous 60-day unlocking mandate led to significant annual losses for the company due to fraud. The FCC stated that the action "closes a loophole that sophisticated criminal networks and everyday lawbreakers alike have exploited to engage in illicit activity."The FCC also revealed that unlocked handsets were frequently stolen and resold for premium prices on the dark web.

These devices are often trafficked to international markets, including Russia, China, and Cuba, the Reuters report added.

How Verizon made FCC reverse its rule

Verizon, which requested the change last year, told the FCC that device fraud and trafficking are a large and growing problem and "organised globally through connected criminal networks,” the Reuters report noted.Verizon told the FCC that this has resulted in it losing an estimated 784,703 devices to fraud across both prepaid and postpaid offerings in 2023, costing it hundreds of millions of dollars.

Wireless carriers previously agreed to unlock postpaid mobile phones, also known as handsets, after they are paid in full, and prepaid phones no later than one year after initial activation, the FCC told Reuters.The FCC said Verizon is the only major provider that the agency requires to unlock its mobile phones 60 days after activation, which is earlier than standard industry practice. Meanwhile, Verizon said that it “saw a spike in fraud of approximately 55% after TracFone moved from its earlier policy of a one-year lock to Verizon's 60-day lock” as a condition of the FCC's approval of the transaction.FCC Chair Brendan Carr said that organised criminal networks have exploited the FCC's handset unlocking policies to carry out criminal acts, which include drug running and human smuggling.