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Technology, the Phone, and the Carrier
The Bottom Line
Technology and economics combine to limit your choice of cell phone, both as a new customer and when switching providers.
As mentioned elsewhere, most cell phones sold with service in the U.S. are preprogrammed to work on a specific carrier's network. There are a couple issues at work here. The first is a technological one: Phones are only compatible with the digital network technology for which they were designed; a CDMA phone, for instance, will not work on a GSM network. So, for example, if you today have Verizon service (CDMA), and want to switch to AT&T (GSM), technology will force you to buy a new phone. See page 34 for more on the different technologies in use in the U.S.
The second issue has to do with the economics of the wireless industry (see page 46). Most new phones bought with service are heavily subsidized by the carrier as a way to attract new customers. As a result, the carrier wants to protect the investment it has made in you. One way they do this by contract, of course, but another method is by having the phone manufacturers “lock” the phones so they can't easily be used with another provider, even one with the same technology.
Unlocked cell phones are available, but they generally cost several hundred dollars more than the same phone purchased with service from a carrier. If you are a frequent international traveler, having an unlocked phone may provide you with some benefits (see page 38).
Be Careful What You Wish For
Some people complain about locked phones, and there have been lawsuits filed around the topic, although none had made much progress through the court system as of the summer of 2006. The issue has come more clearly into focus since number portability made it easier to move around one's phone number. (“If I can take my number, why can't I take my phone?”)
If a legal challenge is ultimately successful, the wireless carriers may be forced to provide unlocked phones to their customers. However, this could be one of those “be careful what you wish for” things, as the end result would likely be much higher phone prices — carriers would be reluctant to subsidize a phone for a customer who could easily walk away with it.