Congress May Force Telecoms to Offer Phones without Contracts

Under a proposed U.S. law being debated today, telecoms would be required to offer handsets without requiring users to sign a service contract to get them.

Despite what some have said, this law wouldn't require telecoms to offer unlocked phones that can be used with any telecom, but it would force them to sell all their devices without forcing users to agree to multi-year contracts.

The most obvious example of a product that would be Apple's iPhone. The only way to get this model in the U.S. is to sign up for two years of service with AT&T.

Other Proposed Regulations

The law -- which is being sponsored by Edward J. Markey (D-MA), Chairman of the House Subcommittee on Telecommunications and the Internet -- includes other changes, too.

The Wireless Consumer Protection and Community Broadband Empowerment Act (PDF) would require mobile service provider to describe the terms and charges associated with any wireless service plan "in a clear, plain, and conspicuous manner".

The description of the service plan would have to include:

• the duration of the plan;
  
• a description of any charges associated and the amount of such charges,
  
• the duration of any trial period included in such plan;
  
• the number of minutes of service per month or other duration included in any such plan and the method by which such minutes will be calculated and assessed;
  
• the terms of subsidizing any wireless customer equipment; and
  
• the existence of any early termination fees, any service initiation fees, or any other
  25 non-recurring fees.

Markey's proposed law would also require telecoms to offer a service plan that doesn't have an early termination fee.

And, in the cases where the customer has signed up for a long-term contract in order to receive a discounted phone but later wants to get out of the contract, the law would require the early termination fee to be prorated over the duration of a consumer's wireless service plan. The idea of this is to make the termination fee related to the recovery of the cost of the subsidized phone, not to punish the consumer for wanting to break the contract.

Markey's subcommittee held a meeting to discuss this proposed law this morning.

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