On January 26, 2013, the Librarian of Congress issued a ruling that made it illegal to unlock new phones. Unlocking is a technique to allow your phone to use a different carrier. Doing so could place you in legal liability for up to 5 years in jail and a $500,000 fine (specifically the Librarian of Congress allowed the existing exception to lapse). This prohibition is a violation of our property rights, and it makes you wonder, if you can’t alter the settings on your phone, do you even own your own phone?
The ruling is a clear example of crony-capitalism, where a few companies asked for the law to be changed to their pecuniary benefit despite the invasion of our property rights, its impact upon consumers, and its impact upon the overall market. This decision creates higher thresholds to entry for new market participants, which hinders competition and leads to less innovation.
Overall this is a clear example of copyright law run amuck – the underlying law was created to protect copyright but it’s being applied in a manner that no legislator expected in 1998 when they voted for the bill. The underlying law, the Digital Millennium Copyright Act (DMCA), was passed three years before the iPod, six years before Google Books and nine years before the Kindle. Now that it's clear that the DMCA is being interpreted in a way clearly contrary for which it was passed, it’s incumbent upon Congress to act.
When the Librarian of Congress (who had previously provided exceptions allowing this activity) made on this issue on October 28, 2012 – Congress refused to act. When that ruling went into effect months later on January 26, 2013 – Congress refused to act. On January 27, 2013, I published an article in the Atlantic, The Most ridiculous law of 2013 (So Far): It is Now a Crime to Unlock Your Smartphone that brought more attention to this issue and received over a million hits (even briefly knocking the website offline). Despite concern from across the country, online and in the mainstream media – Congress refused to act. In my follow-up article I called their failure to address this issue “a dereliction of duty.”