MetroPCS to customers: Bring your own phone

By Peter Svensson

updated 5:56 p.m. ET June 27, 2008

NEW YORK - MetroPCS Communications Inc. has become the largest U.S. wireless carrier to say it will let customers bring cell phones from other carriers, which it will then reprogram for use on its own network.

This week's announcement by the Dallas-based regional carrier is one of a series of moves in the industry that amount to a gradual opening of the U.S. wireless market, giving consumers more choice over what phones to use on what networks.

Carriers generally sell phones that are locked to their own service. This protects their business model, which is based on subsidizing the cost of the phone by hundreds of dollars, then making that money back on monthly service fees.

MetroPCS's move threatens these traditional rules. It allows customers with certain models of phones from Sprint Nextel Corp., Verizon Wireless, Alltel Corp. and a few other carriers to bring their phones to MetroPCS stores, where they will be reprogrammed.

Phones from AT&T Inc., T-Mobile USA or other providers that use a technology known as Global System for Mobile, or GSM, won't work on MetroPCS's network. It is already possible to bring an unlocked GSM phone from, say, T-Mobile, and have it activated on AT&T's network, but AT&T won't unlock the phone for you.

A smaller carrier, Pocket Communications, reprograms phones for customers. Its network covers the San Antonio area.

MetroPCS's network covers 14 large cities, including Miami, Atlanta, Dallas, Detroit, Los Angeles, San Francisco and Las Vegas. It had 4.4 million subscribers at the end of March.

Its network uses the Code Division Multiple Access, or CDMA, technology. CDMA carriers maintain databases of the serial numbers carried by phones that they have sold, and except for Pocket and now MetroPCS, won't activate phones with other numbers. They generally say that they won't let any phones on to their networks without putting that model through rigorous testing. This applies even to phones that are functionally identical to their own, like the many slight variations of the Motorola Razr sold by different carriers.

Consumer groups have been fighting the locking of phones and exclusive agreements between manufacturers and carriers that, for instance, restrict Apple Inc.'s iPhone to AT&T Inc.'s network.

Apart from locking the phones, carriers protect their business model by signing customers to two-year contracts, and charging an early termination fee if they break it. MetroPCS's move does not change that fact, but major carriers have been reducing their early termination fees this year, prorating them depending on how long a contract has been in force.

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