Overseas crime rings are profiting from the trafficking of U.S. wireless devices because of an outdated FCC rule that prevents providers from controlling their phones. Repealing it should be a no-brainer for the FCC and the Trump administration – get rid of the wasteful and harmful cell phone unlocking rule.
When the FCC adopted its C Block rules back in 2007—the same year the iPhone debuted—it was an era of nascent innovation, budding excitement, and deep uncertainty in the wireless space. The Apple iPhone was new, and was only available on AT&T’s network. And the app economy didn’t exist yet, although the memory of “walled gardens” during the early stages of the Internet were fresh. At the behest of Big Tech players, the Commission imposed unique open access and device unlocking requirements on a specific set of wireless licenses. It was a well-meaning experiment at the time, designed to give consumers more choices and promote competition. But even then, the FCC openly acknowledged that this was a regulatory gamble and warned that it could result in “unanticipated drawbacks.”
Fast forward nearly two decades, and the drawbacks are not just unanticipated—they’re dangerous and costly. Organized criminal enterprises are exploiting this antiquated rule to orchestrate large-scale handset trafficking operations. These bad actors steal or fraudulently obtain mobile devices in the United States, then ship them overseas in coordination with sophisticated criminal networks at the expense of American companies and consumers.
It's a slap in the face for a Trump administration that has made enhancing law and order and cracking down on crime a top priority.
The headlines speak volumes about the depth and breadth of the problem. In 2021, 101 individuals were indicted in Texas for a trafficking conspiracy involving 70,000 stolen phones valued at nearly $100 million. In 2023, a Boise-based crime ring was taken down after law enforcement uncovered a $51 million fraud operation involving counterfeit cell phones—an investigation that started with drugs and ended in stolen electronics. These criminal enterprises are stretching law enforcement thin and costing companies like Verizon hundreds of millions of dollars each year.
Verizon is bound by a decades old Unlocking Rule at the FCC which requires the company to automatically unlock a device after just 60 days—unless fraud is found. But here’s the rub: fraud isn’t always detectable within that narrow window. Once unlocked, these devices become easy targets for trafficking and resale on the global black market.
Verizon has requested a waiver that would bring it in line with the rest of the wireless industry’s guidelines that govern unlocking best practices. Those guidelines—unlocking postpaid phones once they’re paid in full, and prepaid phones no later than one year after activation—strike a smart balance between consumer flexibility and fraud prevention. They also strike a balance that allows U.S. carriers to reduce costs to consumers through device subsidies – a practice that isn’t available in many parts of the world.
Businesses deal with government regulations of all sorts, but this one is different because of the unintended consequences and impact it's placing on law and order and our nation’s law enforcement officials. The Unlocking Rule is forcing us to waste limited law enforcement resources trying to track down the foreign criminals that are lining their pockets at the expense of American consumers and U.S. businesses. President Trump has made it crystal clear that law and order will be preserved under his watch. Getting rid of the C-Block unlocking rules would be an easy win in furthering that agenda.
Today’s wireless market is more competitive than ever. Providers are falling over themselves to offer better prices, faster service, and the very popular free device incentive to entice customers to switch networks. Extending the lock period would not hinder this competition. What it would do is make it harder for international crime rings to siphon off subsidized devices, hurt honest consumers, and drive up costs for everyone.
The Unlocking Rule is a relic of another time—well-intentioned, but ill-suited for the realities of today’s wireless ecosystem. It’s the kind of outdated regulation this administration has rightly pledged to eliminate in the name of smart, modern governance.
Let’s align policy with reality. Let’s protect consumers, not criminals. It’s time for the FCC to grant this waiver and make America safer.
Ken Blackwell is President of the Council for National Policy, and Chairman of the Conservative Action Project(CAP), in Washington, DC.
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