TracFone, a major provider of prepaid mobile phone service, must keep its promise to let customers unlock their devices and transfer service to competing carriers, the U.S. Federal Communications Commission said.
TracFone must transition to unlockable phones in a settlement announced by the FCC Wednesday. In addition to the TracFone brand, the company provides pay-as-you-go mobile service through the brands Straight Talk, Net10 Wireless, SafeLink Wireless, Telcel America, Simple Mobile and Page Plus Cellular.
TracFone, with about 25.7 million U.S. mobile customers, violated FCC rules by failing to live up to promises that it would unlock phones for customers enrolled in the agency's Lifeline program, a subsidized mobile program for low-income people, the agency said.
Under the settlement, up to 8 million TracFone customers are eligible to receive a new unlocked handset, credit for a handset upgrade, or a partial cash refund in exchange for their locked handset. The average benefit per customer will be US$10 per phone, with a total cost to the company of about $80 million, the FCC said.
Refunds, upgrade credits and replacement handsets will be available under the program through June 2018, the FCC said.
TracFone didn't immediately respond to a request for a comment.
In addition, TracFone, owned by Mexican company América Móvil, will provide a projected $3.2 million to the Lifeline program tied to how quickly its unlocking program becomes active.
"Unlocking of cell phones has been widely embraced by the wireless industry and by consumers across the country," Travis LeBlanc, chief of the FCC's Enforcement Bureau, said in a statement. "Today's agreement ensures that millions of eligible TracFone customers will be able to use their phones on any compatible network they choose."
TracFone repeatedly told the agency in filings that it would abide by a wireless industry code of conduct, which went into effect in February, that promised widespread mobile phone unlocking, the FCC said.
Under the settlement, TracFone must provide customers with its handset unlocking policy by Sept. 1. On that day, TracFone customers who don't receive Lifeline subsidies can trade in their old devices for a cash refund.
By next May, TracFone customers who aren't in the Lifeline program will be able to trade in their old devices for an upgrade credit toward a new, unlockable phone. Also by May, TracFone must provide new Lifeline customers with phones capable of being unlocked, and existing, eligible Lifeline customers may request a replacement unlocked handset.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is email@example.com.
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.