Cell Phone Freedom Act: : a small step or a giant leap in Canadian policy making?

Int. J. Liability and Scientific Enquiry, Vol. 5, No. 1, 2012 1

Cell Phone Freedom Act: a small step or a giant leap in Canadian policy making?

Jan André Blackburn-Cabrera Fauteux Hall, 57 Louis Pasteur St., Ottawa, Ontario K1N 6N5, Canada E-mail: [email protected]

Abstract: The SIM lock is a popular practice of mobile phone manufacturers; they lock a SIM card to restrict the use of phones to specific providers. A code (PUK) can provide the consumer with wireless freedom. In Canada, it is not illegal for a consumer to unlock the SIM card on a cell phone. Yet, not a single carrier unlocks phones; locking the phone to a carrier is also not illegal. Canada is the most expensive place in the world to have a cell phone plan, Canadians use their cell phones more than consumers in most other countries, and Canadian wireless telecom companies have the highest profit margins in the developed world. This paper will analyse Canadian policy making in the telecommunications sector and argue poor market regulation. It will also analyse the failing efforts from the Canadian Government to adequately regulate competition by allowing practices like SIM locks, which restrict consumer choice.

Keywords: network lock; GSM; unlocking; jailbreaking; telecommunications; mobile phones; Cell Phone Freedom Act; Canada; SIM lock.

Reference to this paper should be made as follows: Blackburn-Cabrera, J.A. (2012) ‘Cell Phone Freedom Act: a small step or a giant leap in Canadian policy making?’, Int. J. Liability and Scientific Enquiry, Vol. 5, No. 1, pp.1–21.

Biographical notes: Jan André Blackburn-Cabrera is an LLM Candidate at the University of Ottawa’s Law and Technology Center. He has written extensively on domestic and international issues associated with social media and wireless technologies. Previously, he acted as a Student Legal Counsel for the Legal Aid Clinic at the University of Puerto Rico, where he provided representation for indigent clients. Currently, he volunteers at the Canadian Internet Policy and Public Interest Clinic which specialises in copyright and cyber law.

1 Introduction

The SIM1 card is a small computer chip found inside almost every cell phone. It is the capability built into the GSM2 global standard to allow for worldwide cell phone service coverage. The use of SIM cards is mandatory in GSM devices and most carriers only use GSM-capable devices. The SIM lock3 is a popular wireless telecommunications practice

Copyright © 2012 Inderscience Enterprises Ltd.

2 J.A. Blackburn-Cabrera

where cell phone manufacturers restrict the use of phones to specific countries and network providers by locking the SIM card.

In Canada, it is not illegal to unlock the SIM card on a cell phone. Unlocking a cell phone is done to use the phone with another carrier and it is legal because it is not illegal. Therefore, anyone who wishes to unlock their phone to change the SIM card can do it, but at their own risk. It is also important to note that a simple code (called PUK code) can provide the consumer with wireless freedom. Yet, not a single Canadian carrier unlocks their phones or provides this code to their subscribers. And they have a lot of subscribers.

According to a recent report from IE Market Research (IEMR) Corp., Canada is predicted to have 30.7 million mobile subscribers by the end of 2014. The number of wireless subscriptions would be about 33% higher than at the end of 2009.4 Not surprisingly, IEMR also predicts Rogers Wireless, Telus Mobility and Bell Mobility will continue to have a 96% market share by the end of 2014, identical to its market share today. IEMR predicts that:

Rogers Wireless will increase its subscriber market share from 37.2% in 2009 to 37.8% in 2014; Telus Mobility’s market share will increase slightly from 28.6% in 2009 to 29.1% in 2014; Bell Mobility’s share of total subscribers will decline from 30.2% in 2009 to 29.1% in 2014. The researchers predict that by the end of 2014, Rogers Wireless will see its subscriber base increase from 8.58 million in 2009 to 11.6 million in 2014.5

The report also says mobile users in the USA and Canada tend to pay more for a complete cell phone package than anyone else in the world. According to the report “mobile users in the US need to pay at least $59.99 for a complete cell phone package that includes voice, text, and data […]. Users in Canada must pay $67.50 – the only country to top the US”.

Certain industry policy makers find it impossible to believe that Rogers, Telus and Bell will maintain such a massive share of the marketplace despite the entrance of new wireless competitors such as Wind Mobile, Public Mobile, Videotron and possibly Shaw in the coming year. But these numbers mean that ‘The Big Three’ have exactly 96% of the entire Canadian wireless cell phone market. This is incredible power over the cell phone consumer and they can effectively execute marketing and business service models that are anti-competitive that limit and restrain competition and provide service without the consideration for the consumer.

According to the New America Foundation and its Open Technology Initiative report titled An International Comparison of Cell Phone Plans and Prices6, Canada ranks #1 as the most expensive place in the world to get a cell phone plan7. The average Canadian pays $4.80 monthly for 250 texts. In prepaid terms, Canadian rates average at $0.14 per text. In terms of minutes, monthly averages for Canadian consumers are paying on average $38.70 for 250 minutes. The prepaid calling average was $0.38/min. These numbers are outrageous compared to the rest of the world. In Singapore, for example, prepaid prices range from 9 to 16 per minute. As far as texting, service prices range around the $0.03 per domestic text and $0.11 per international text.

Transparency continues to be a big issue for Canadian telecoms alongside expensive service. A recent example of change due to consumer pressure is Telus’ new “axing [of] the System Access Fees (SAF) and the carrier 911 fees” and promoting “the price you see is the price you pay”. With the Telus Smartphone Plans ([which] includes voicemail, call waiting, conference calling) “you pay only $50 per month and you will get: 100 local anytime minutes – 50 bonus anytime minutes – unlimited local talk and text with

Cell Phone Freedom Act 3

five numbers or unlimited incoming and 1,000 outgoing text messages or double anytime minutes – unlimited nights (9 PM) and weekends, and a full 500 MB of data”.8 Only $50.

These prices are still expensive and the amount of daytime minutes the average Canadian gets with a cheap cell phone plan is laughable. Canada also ranks in the top of the average for minutes of use per subscriber account. This is very meaningful information for the market because it means maybe Canadians use their phones too much. Of course, this is fantastic news for The Big Three.

According to the 2007 OECD Communication Outlook Report, Canada ranks ninth in cost of service for medium intensity users of the 30 OECD countries. Meanwhile, in 2008, wireless telecomm revenue was 40.3 billion dollars and remained the largest revenue component of Canadian telecommunications revenues with 40% of the market. CanadianBusiness.com’s Rich 100 List ranks the ‘Rogers Family’, (Rogers Communications, Inc.) as the #4 richest in Canada with a net worth of 6.02 billion dollars.9

2 Public policy in Canada

Canada is the most expensive place in the world to have a cell phone plan, Canadians use their cell phones more than consumers in most other countries, and Canadian wireless telecom companies have the highest profit margins in the developed world, at 45.9%.10 Yet, it is a country with an expected growth rate of 33% in mobile subscriptions over the next five years. These are warning signs for regulation. The Canadian wireless market is in peril of higher prices and poorer service with little motivation from telecom executives to change their minds about prices and certainly unlocking. It is important to analyse Canadian policy in all its phases to comprehend the reason behind the little to no cell phone regulation and the efforts from the government to provide competition. It is just as important to note that not all public policy struggles are solved through legislation and governmental regulation as media pressure and consumer-oriented policy pressures can lead to a faster change in the market.

2.1 Canadian regulators: Canadian Radio-television and Telecommunications Commission’s wireless service policy

The Canadian Radio-television and Telecommunications Commission (CRTC)11 regulates and supervises Canada’s telecommunications and broadcasting systems and reports to Parliament through the Minister of Canadian Heritage and the Minister of Industry. According to their website, its mandate is to ensure that both the telecommunications and broadcasting systems serve the Canadian public. The mandate says: “[I]n telecommunications, the CRTC ensures that Canadians receive reliable telephone and other telecommunications services, at affordable prices”.

According to their own website, the CRTC’s role in telecommunications is ‘evolving’. In these cases, The CRTC regulates only where the market does not meet the objectives of the Telecommunications Act.12 This statement seems to mean that they care about reliable and cheap service for wireless telecommunications, but it means the market does not need to be regulated. In the CRTC’s website, under Cell Phone or Wireless Telephone Services: Rates, Quality of Service and Business Practices,13 says they do not


regulate the rates, quality of service or business practices of wireless service providers because the market for wireless services is sufficiently competitive. “The CRTC still plays a role in ensuring the confidentiality of customer information and ensuring that customers are treated fairly”. Nice.

So, what do they actually do with regards to cell phone service to comply with the mandate? They provide two options. The first one is “[i]f you have a complaint about your service, contact your service provider directly”. The second is to contact the Commissioner for Complaints for Telecommunications Services (CCTS). On “additional cell phone charges, a recent problem in Canada for Rogers Communications, Inc. (big surprise), the official position of the CRTC (government telecommunications regulator) is that it does not approve or regulate various additional charges included in your wireless service bill including: system access charges, 911 service and contribution fees”. It also talks about wireless number portability, and under coverage areas it says, “the CRTC doesn’t require wireless service providers to offer service in areas where wireless service is not currently available, nor does it have coverage maps”.

The CRTC does nothing with regards to regulating cell phone prices, customer service, onerous contract length regulations and a healthy, competitive market. Most importantly, even if the CRTC’s role in telecoms is ‘evolving’, the CRTC should follow their mandate by regulating a public policy concern regarding the Canadian cell phone market by ensuring that Canadians receive reliable telephone and other telecommunications services, at affordable prices. The CRTC admits it is a problem, yet it states the current wireless market in Canada “allows competition, not regulations, to drive the market” because it is competitive enough. They actually believe that.

2.2 Commissioner for Complaints for Telecommunications Services

Wireless service gets 51.7% of complaints. The CCTS cannot take complaints about customer services. In 2009–2010 CCTS report, there were 3,747 new complaints opened, 1,151 turned into investigations, 25 ended in recommendations and only four were contentious decisions; two of these were against Bell, one against MTS Allstream and one against Telus. It seems too complex to attempt to argument the effectiveness of such an agency.

2.3 What would Parliament do (WWPD)?

2.3.1 Bill C-560: will Canadians get cell phone freedom?

On June 17, 2010, Bruce Hyer, a member of the Canadian House of Commons, presented Bill C-560 titled Cell Phone Freedom Act14. The Bill mandates that:

a consumers buying new cell phones in Canada must be informed of the existence of any SIM lock (also known as a network lock) on their phone before sale

b wireless phone companies must unlock handsets upon request, without fee, when a consumer purchases a new phone outright (unsubsidised) without a contract

c wireless phone companies must unlock handsets upon request, without fee, when a consumer comes to the end of their contract, or at any time thereafter.


The bill has a simple and effective mandate, it is pro-consumer, and it is not costly for the telecoms.

When presenting the bill, Mr. Hyer commented on the effective lack of competition in the Canadian wireless market, which combined with lack of regulation, has led mobile phone providers to routinely place restrictions on consumer choice. Unlike most other developed countries, [in Canada] there are no regulations regarding placing a SIM lock on mobile phones so that consumers are limited to using their handsets only on a single provider’s network, and the practice has become standard in Canada.

“[C]onsumer choice, […] is not always wanted by companies that have an oligopoly”. Mr. Hyer also told the Globe and Mail that large wireless service providers in Canada15 should be forced to ‘unlock’ subscribers’ cell phones if requested, which could dent carriers’ profits and lead to subscribers moving more easily between cell phone companies. He added “empowering consumers to move more easily between companies would force [them] to compete more aggressively on price and services to lure consumers, benefiting consumers and making the industry more competitive. Network locks will become even more important as new competitors offer services consumers might want to try”.16

Under the legislation, wireless service providers would have three simple and easy obligations, which ultimately have the mere effect of better informing the consumer of the purchased cell phone. Telecommunication companies may still employ such locks on customer phones while under contract even if the bill passes, so it is unlikely to impact the common practice of offering. It is a simple, consumer and fair-market-oriented bill, straightforward, transparent and the telecoms will not have to incur in losses. It seems like a reasonable answer to the SIM lock issue in terms of consumer protection. For now. The answer is banning SIM locks altogether. Whether or not legislation to that effect can pass in the Canadian House of Commons is yet to be seen.

2.3.2 Industry Canada’s Copyright Modernization Act

Canada’s Industry Minister Tony Clement tabled Bill C-3217 in June of 2010, entitled Copyright Modernization Act. The bill changes the panorama for digital technologies in Canada through the protection of digital technologies in copyright legislation. If Bill C-32 passes, the circumvention of technical protections measures will be illegal.

According to Section 41.1 (1)(a)18, “[N]o person shall circumvent19 a technological protection measure within the meaning of paragraph (a) of the definition ‘technological protection measure’ in Section 41”.20 There are exceptions to the applicability of Section 41, including the exemption on the prohibition of the circumvention of TPMs on cell phones as proposed in Section 41.1821. Yet, the proposed exception to the prohibition of circumvention, which is specifically addressed for cell phone users and includes unlocking cell phones for the purpose of changing network provider, is not enough protection.

As hearings for Bill C-32 were being held in Parliament this past fall, there was a lack of understanding as to the reasons a cell phone user should be protected by the law when it comes to digital SIM locks. Allowing the circumvention of the SIM locks placed by manufacturers like Apple, that only commercially tie wireless phones to a specific cellular network provider is not a solution. It is necessary that cell phone users freely circumvent SIM locks to allow for the ‘fair dealing’ and use of their copyrighted personal


property with adequate protection from the law. And the only way to do that is to ban SIM locks altogether.

Mr. Clement said, “our government promised to introduce legislation that will modernize Canadian copyright law for the digital age while protecting and creating jobs, promoting innovation and attracting new investment to Canada. This legislation will ensure that Canada’s copyright laws are forward-looking and responsive in a fast-paced digital world”.22 Yet, these proposed amendments to the Copyright Act are absolute and unbalanced prohibitions of digital locks that do not take into consideration two of the government’s main objectives with the bill: permit certain uses of copyright material by consumers and ensure that the Copyright Act remains technologically neutral.23 Clement should keep that promise.

In the balance between authorship protection and user’s rights, the question remains if Bill C-32 and federal copyrights legislation is the right route for the Canadian legal system to protect digital locks on phones. Certainly, the consumers of iPhones and other mobile phones that require circumvention of software would not be financially guaranteed by this exception if they circumvent the digital locks on their phones. In a blog post by Internet and E-commerce Law Professor Michael Geist, he answers 32 questions on Bill C-32.24 He writes about the good, the bad and the ugly of the bill. He supports many provisions but disagrees with others. As far as unlocking cell phones, he says that:

[T]he inclusion of a circumvention exception for unlocking cell phones is certainly a good thing, yet the net effect is merely to retain the status quo. It is currently legal in Canada to unlock a cell phone, with the primary barriers being carrier contracts and technical inability to do so. The new exception does not create any new rights to unlock the cell phone, but rather merely retains the current right to do so.

The right of not being prosecuted for infringement? Bill C-32’s exception for cell phone unlocking is unnecessary. Given Canada’s wireless mobile market exponential growth, federal legislation needs to address cell phone SIM locks separately from copyright provisions. Bill C-32’s exception to circumvention of the lock on a ‘radio apparatus’ does not constitute adequate legal protection for users and should be reconsidered.

2.4 Provincial legislation

When it comes to cell phones, it is important to understand that devices like the iPhone are babies in the electronic era and will begin to become a part of all human life and business. By having such importance, the phone itself need not be locked; it should be considered a personal computer. This fact transcends the ability of a company to lock their phones to a network and makes the phone an important trade in commerce that needs to be regulated and used freely and openly. Why companies lock their products is a business practice with logical economic reasoning and competitive value, yet some of the most costly and available marketing strategies come from the telecom industry and are leading the way towards a locked world. This needs to change. The Canadian legal system needs more bills like the following, which protect the consumers of personal electronics.


2.4.1 Ontario’s Bill 133: wireless transparency

As recently as November 16, 2010, David Orazietti, a member of the Legislative Assembly of Ontario, presented Bill 133, Wireless Phone, Smart Phone and Data Service Transparency Act. Similar to Bill C-560, the bill would require SIM unlocking of devices if consumers pay full price or a contract expires. The bill would also require specific disclosures about service plans, extra charges, roaming charges and monthly caps.

A provision of the Act would require the companies to charge a maximum of one-month service fee as liability for cancelling a contract if done by the consumer with a 30-day’s notice. This is virtually impossible to implement because in Canada, “[A] customer with a voice and data plan with Rogers wishing to discontinue a wireless contract two years into a three-year plan would be liable for up to $300 (plus tax)”.25 It seems at least to be a step forward, not so much a giant leap. Finally, we will see change. Why now? Because it is hard for Canadians to complain and Canadian consumers finally complained.

2.4.2 Quebec’s Consumer Protection Act

Quebec’s Justice Minister tabled Bill 60 on June 17, 2009, a piece of legislation that would amend Quebec’s Consumer Protection Act. The bill passed and these new rules focus on primarily [on] contracts for the provision of telecommunications services, such as cell phone, cable or internet service agreements.26 Provisions include the prohibition of automatic renewals upon the expiry of a contract whose term exceeds 60 days, unless the renewal is for an indeterminate term. Other main amendments to the Act have to do with a merchant’s right to amend an existing contract, the creation of a new set of rules for “contracts involving sequential performance for a service provided at a distance”, and the sale of prepaid cards.

The bill states that merchants would not be permitted to amend a contact that has begun to run except on very specific conditions. The unilateral amendment by the merchant of an essential element of the contract (whether nature of the goods or services, price, or term of the contract) would be prohibited on fixed-term contracts. In regards to cancellation fees, according to the bill, “the consumer may cancel the contract at any time, at his or her discretion, by written notice to the merchant”. The proposed legislation would also create some new obligations that would prohibit a merchant from stipulating in a contract that the consumer, on failing to perform the obligations in the contract, is to pay any charges, penalties or damages other than accrued interest. It would also allow injunctions against prohibited practices and stipulations in consumer contracts, by providing that consumer advocacy bodies may, on certain conditions, apply for such injunctions.

2.4.3 Consumer Protection Act of Ontario

According to the statute, the following are prohibited practices: unclear consumer agreements, bad disclosure of information, incorrect delivery of information, bad quality of services, bad performance of consumer agreement and amendments or tied products to subsequent agreements. The 2002 Provincial Act is being violated daily by the main telecommunication companies in Canada, and efforts to improve are taking too long.


Canada’s big wireless companies put locks on cell phones that prevent users from taking the phone to other carriers […] due to a combination of factors: the carrier kicks in a subsidy to reduce the cost of handsets in exchange for a contract, works with handset makers to optimize a phone’s compatibility with a network, and profits when people roam internationally and are unable to pop a foreign provider’s SIM card into their handsets.27

On the other hand, it can be considered progress in the protection that the consumer of wireless services requires, that Quebec’s Provincial Bill 6028 passed to amend the Consumer Protection Act29. In its Explanatory Note, the amendment states the bill introduces new rules on the information a contract must contain, the rescission of the contract, the use of the security deposit and the renewal or cancellation of the contract by the consumer. It also amends the Consumer Protection Act to include special provisions applicable to contracts involving sequential performance for a service provided at a distance.

3 Fair Dealing v. Fair Use: U.S. v. Canada

Jailbreaking an iPhone for the purpose of unlocking or any other unlocking procedure to unlock a cell phone’s SIM card as placed by manufacturers like Apple, Inc. does not constitute ‘fair dealing’ of the software or firmware used to operate the phone as contemplated in Section 29 of the Canada’s current Copyright Act. Even so, Bill C-32’s exception for cell phone unlocking is unnecessary.

Given Canada’s wireless mobile market exponential growth, federal legislation needs to address cell phone SIM locks separately from other copyright provisions where infringement protection is an issue of economic concern for the cell phone manufacturers and the wireless service providers. Bill C-32’s exception does not constitute adequate legal protection for users of cell phones and should be reconsidered.

3.1 The DMCA: ‘fair’ ‘use’

In 2009, the Librarian of Congress published Rulemaking on Exemptions from Prohibition on Circumvention of Technological Measures that Control Access to Copyrighted Works30, through the rulemaking procedure established in the Digital Millennium Copyright Act31 to exempt:

Computer programs, in the form of firmware or software, that enable used wireless telephone handsets to connect to a wireless telecommunications network, when circumvention is initiated by the owner of the copy of the computer program solely in order to connect to a wireless telecommunications network and access to the network is authorized by the operator of the network.

In a request32 presented to the Librarian of Congress by Stanford Cyber Law Professor, Jennifer Granick wrote:

Today, some mobile phone carriers [like Apple] inform customers in the document setting forth the Terms of Service that they may not program their phones to run on competing networks. Others may soon follow. Carriers may argue that a ‘Terms of Service’33 document that states that the customer does not have authorization to reprogram the handset for use on another network distinguishes their circumvention claim from that in Chamberlain.34


This is the same exact exception drafted in Bill C-32, although there are those who argue that the Canadian bill is far more restrictive. According to Dr. Geist, this DMCA rulemaking decision35, “[e]stablished a series of new anti-circumvention exceptions and attracted considerable attention on both sides of the border”.36

He added that recent developments in the USA demonstrate that the Canadian proposal is also considerably more restrictive than what is found in the USA. In a 2007 case, the first time a court applied the new exemption for unlocking cell phones, it held that unlocking for the purpose of selling them for profit was not “for the sole purpose of lawfully connecting to a wireless telephone communication network and therefore outside of the exemption’s scope”.37 The defendants had bought cell phones en masse, unlocked them and sold them for profit. The court reasonably rejected this practice is economically driven.

The court intelligently concluded that relying on a ‘fair use’ defence left users with a significant legal risk. The USA holdings of Chamberlain Group Inc., v. Skylink Technologies Inc.,38 Lexmark v. Static Control Components39 and StorageTek v. Custom Hardware Engineering & Consulting40, “do not ensure that consumers who want to unlock or ‘jailbreak’ their mobile phones will not be sued, even if the telecommunications companies allow such practices”.41 This leads to the reasonable conclusion that not even US case law ensures jailbreakers will not get sued. An explicit law allowing it or banning SIM locks is the only way to assure customers that unlocking will not be challenged in the courts.

3.2 Bill C-32: ‘fair’ ‘dealing’

According to Section 29 of the Copyright Act of Canada, it is not copyright infringement if the user of a copyrighted work is ‘dealing’ ‘fairly’ with the work, for the purposes of private study or research, for criticism, review or news reporting. Fair dealing is a provision of the copyright law in whereas certain uses of copyrighted work are statutorily allowed and do not constitute copyright infringement. Calling on a cell phone on a different cellular network from the one it was used on when it was purchased, for the simple fact of having a contract with a service provider, is clearly a non-infringing activity.

In CCH Canadian Ltd. v. Law Society of Upper Canada42, the Supreme Court of Canada held that the ‘fair dealing’ provision of the Act (Section 29), as well as related exceptions, is a user’s right. “In order to maintain the proper balance between the rights of a copyright owner and users’ interests, it must not be interpreted restrictively”.43 As there is no definition for what is ‘fair’, the Court enumerated six factors that provide a “useful analytical framework to govern determinations of fairness in future cases:

1 the purpose of the dealing

2 the character of the dealing

3 the amount of the dealing

4 alternatives to the dealing

5 the nature of the work

6 the effect of the dealing on the work”.44


Under the CCH Canada test, the practice of unlocking a cell phone or jailbreaking an iPhone is a non-commercial private use of computer software. The purpose of the dealing is non-commercial, the character of the dealing is private and the amount of the dealing involves a single piece of equipment. There are no alternatives to unlocking an iPhone if not through circumventing the access control TMPs, the nature of the work is copyrightable software and there are no negative effects to the work through jailbreaking or unlocking.

The changes made in the firmware when unlocking an iPhone are necessary measures in their continuing use of the software in operating their handsets and through the process of unlocking, and the program is not marketed, manufactured, distributed, transferred, or used for any purpose other than the customer’s own personal or work-related needs. Nevertheless, since jailbreaking copies the software of the iPhone it is currently infringement to unlock it.

The customer who unlocks his phone or jailbreaks his iPhone is not copying the copyright firmware, or selling it, or even using an exclusive right of the copyright owner over that product. A jailbreaker gets inside the firmware, changes the program for it to work on a different cellular network and unlocks it for it to accept the use of a different SIM card. The phone owner must reuse the vast majority of the original firmware in order for the phone to operate. Considering that the user is simply modifying the firmware for personal use on the phone (i.e., changing cellular networks), there is also no harm to the market for the firmware.

Since the changes made to the program are necessary measures in their continuing use of the software in operating their handsets and through the process of unlocking, the program is not marketed, manufactured, distributed, transferred, or used for any purpose other than the customer’s own personal or work-related needs. In the case of jailbreaking, the consumer is forced to circumvent the TMPs on his iPhone by jailbreaking it in order to use a physical device they acquired and legally possess.

Wireless providers may claim they need software locks because they subsidise the price of the handset and they want to make up the difference by ensuring that the customer uses the carrier’s service. However, allowing customers to change networks has little to no adverse affect on the market for handsets. And the legally enforceable contracts every new customer signs provide for a minimum monthly fee and a hefty early termination penalty. These contracts ensure that customers bear at least the cost of a subsidy in their monthly fees, if not more. As a result, a carrier receives every legitimate benefit of the subsidy it provides.

4 Around the world in 80 ways

No matter where in the world you go, a cell phone has always been expensive, from the manufacturing of a good quality handset to the wireless fees for service a telecom company can charge. Whether because they subsidised the phone or incurred in infrastructure costs, prices are high. Certainly, not every cell phone needs to be expensive to cover costs and this is especially true in today’s cell phone market.

Legislation around the world focused on trade and commercial practices is usually enacted through consumer protection or competition laws. Whether or not these laws work to provide adequate protection to the average consumer of cell phone goods and


wireless services is yet to be determined. That being said, the pressure felt by producers in a market with continuous and obvious unfair practices of commerce is undeniably unique. Legislation on SIM and other digital locks started to surface in the late 80’s and early 90’s when cell phones became more widely available for the average consumer; usually a large and uncomfortable device or a small one attached to a car with an antenna in the window.

The laws are limited to informing the consumer of the market practice of the SIM lock in place and inform of their right to ask for a device to be unlocked under certain circumstances. In other cases, it is limited to informing the public of the lock. Some technology advocates argue that the SIM lock is not problematic, but the contract itself that ties you to the telecom because these are usually onerous for the average consumer.

Except for Singapore, no country outright prohibits SIM locks on cell phones because the big telecoms thrive under this market system. Singapore’s telecommunications regulator has ruled that the competition clause in mobile carriers’ licences means SIM-locking is not allowed and is a violation of Section 29 (1)(a) of the TAS Act.45 So from 1997 until 2011, Singapore has stood alone as the only country that outright forbids SIM locking. They also have one of the world’s cheapest prices for cell phone devices and wireless service plans.

4.1 International pressure on SIM locks

The world is unlocking, jailbreaking and fairly using their iPhones. Why are not Canadians doing the same? International treaties on copyright46 have been important to the improvement of copyright law in Canada. Article 11 of the World Intellectual Property Organization’s Copyright Treaty47 obligated all contracting parties to “provide ‘adequate legal protection’ and ‘effective legal remedies’ against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under the WTC or the Berne Convention”.48 Canadian policy makers took WIPO’s Copyright Treaty seriously and some argued it was taken too seriously.

Canada’s policy makers went beyond the requirements of the WIPO Treaty when protecting the digital locks on the copyrighted works of artists, and other rights owners, like software giant Apple, Inc. It is outrageous to think that going beyond the world’s standard is a more adequate approach to policy when the rights of users and other consumers are being negatively affected on a daily basis. It is clear that a more restrictive approach would be beneficial, in view of the five thousand dollars per infringement penalties in Bill C-32.

In a July 26, 2010 blog,49 Dr. Geist posted that the “restrictions on distributing circumvention tools, contractual restrictions, and the absence of a general right to circumvent for lawful purposes are slowing down technological innovations, the competitiveness of the wireless industry and the possible infringement actions jailbreakers can face”.50

The DMCA provisions on anti-circumvention make it illegal to circumventing technological locks that control access to copyrighted works without the authority of the copyright owner. Jennifer Granick wrote for Wired Magazine51 about her experience with the DMCA’s anti-circumvention provision while working at the Electronic Frontier Foundation.


While the law was intended to protect music and movie owners who want to distribute their works digitally, but are afraid of infringement, wireless companies started using the law to sue people who purchased and unlocked cell phones. Since unlocking a cell phone has nothing to do with copyright infringement, I applied for an exemption from the DMCA on behalf of two clients: one a business traveler and the other a phone refurbisher, reseller and recycler. She explains how she won an exemption52 in November of 2006 that allows you to circumvent digital locks in order to access [a cell phone’s firmware for the purpose of changing cell phone networks].

This might seem like a ‘digital win’ for consumers until she adds that “[d]espite this success, the exemption does not offer blanket protection for phone unlocking, though the practice might be legal for other reasons”. “The problem is that the exemption protects unlockers [themselves], but it doesn’t apply to those entities that distribute unlocking tools or provide unlocking services to others”. It is important to note on behalf of who she applied for the exception; a business traveller who wanted to communicated around the world without paying a second mortgage on cell phone bills and a seller of refurbished phones who correctly argues unlocking should be prohibited because the amount of phones no longer in use are hurting the environment.

In a US case, FCC, In the matter of Bundling (1992), the Federal Communications Commission expressed its concern that carriers were bundling handset sales with service contracts. Wireless carriers were requiring customers to purchase their cell phones directly from the carriers or authorised agents and also to contract paying for a minimum amount of wireless airtime per month over a period of a year or more. On these practices, the FCC stated its concern that “customers should have the ability to choose their own CPE [handset] and service packages as to meet their own communications needs and that they not be forced to buy unwanted carrier-provided CPE [handsets] in order to obtain necessary services”.53

Yet, since back in 1992, there were low barriers to entry in the handset market, a wide selection of handsets from which customers could choose, no evidence that carriers were refusing service to customers that purchased other brands of handsets and a geographically fragmented market, the FCC permitted carriers to continue to offer handsets and services as a bundled package so long as service was not conditioned on purchasing the handset from the carrier.54 Despite this ruling, almost every carrier today forces customers to purchase handsets directly from the carrier or its approved agents in order to get mobile service.

Once the customer enters into a service agreement, the carriers use a variety of techniques to prevent customers from switching to competitor carriers, whether before or after the term of the service contract has passed. Until recently, carriers were refusing to transfer customers’ mobile numbers when they switched providers, effectively an anti-competitive practice. Customers who wanted to keep their familiar phone numbers were stuck with their carrier, regardless of service quality, price, or terms of provision.

With the enactment of the Telecommunications Act in 1996, Congress mandated that carriers offer number portability in accordance with regulations to be promulgated by the FCC.55 The purpose of this obligation, and others in the 1996 Act, is to “promote competition and reduce regulation [...] to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies”.56 In the USA today, carriers’ continue to include the


tying policy that forces customers to purchase handsets from the carrier or a designated agent, limit the availability of handsets from other sources, restrict the ways dealers are permitted to market handsets, and lock every handset to prevent use with a competitor carrier.

Regardless of whether Bill C-32 receives royal assent or the US Copyright Office grants exemptions for non-infringing activities of copyrightable property by calling them ‘fair dealings’ or ‘fair uses’, respectively, customers are usually the ones who pay the price. Consumers pay a high price for unlocking a cell phone, they risk losing an Apple warranty in the case of the iPhone and, most importantly, it is something the average consumer cannot do on their own. As she notes, since it is prohibited to transfer circumvention measures to others, “most cases, including unlocking, only the small number of persons who have the technical know-how to circumvent can do so”. In the end, and in theory, very few people with technical expertise, if sued, could protect themselves from the exception.

Phone subsidies everywhere in the world is a good example of another excuse for establishing long term contracts with consumers of new cell phone plans or new cell phones, a practice frowned upon by many critics. It is based on the fallacy that they require two or three years to make back 300, 400 even 500 dollars from every consumer they sell an iPhone. Considering buying in bulk is usually cheaper, the phone companies must not be losing that much when a Canadian costumer pays $159 for a new iPhone 4 which immediately requires a $67.80 minimum subscription, a three-year contract, and a cancellation fee without limits. It would also be ignorant to think 150 minutes for ‘daytime minutes’ is enough because of ‘unlimited minutes after 9 PM’ considering Canadians are on top of the list of cell phone usage per capita in the world. Oh, but with the new iPhone 4, Rogers offers 500 MB of data!57 It is obvious the market of cell phones needs regulation.

In Canada’s parliamentary system and while under a minority government, federal legislation takes years to receive royal assent and become law. This slow process makes it difficult for lawmakers to pass bills like C-560 or even amendments to the current Copyright legislation. Therefore, bills like the one presented by Mr. Hyer can have the effect of changing the market by simply being presented, even if it might never pass. The bill itself, the media coverage of the bill and the public’s attention to the media coverage can be enough pressure for telecoms to change their business practices. Slowly.

4.2 Legislation around the world

In May 25, 1999, the EU Commission in European Parliament and Council emitted Directive 1999/44 regulating certain aspects of the sale of consumer goods and associated guarantees.58 Another directive called Unfair Commercial Practices Directive, 2005/29 was a major reform concerning unfair business practices in the EU. Although directives require each and every country to incorporate such practices to their legal system, they can have the effect of providing change without national laws implementing the concept. The directives have been followed but only some countries have regulated the telecom industry’s trade practices through voluntary codes of conduct for, regulators’ position papers and rulings, consumer protection legislation and specific legislation regarding the ban of SIM locks.


In 2001, Dutch mobile carriers made an agreement with the Netherlands’ telecom regulator to establish a code of conduct with respect to SIM locking. This code provides that unlocking fees can be charged within the first 12 months and SIM lock cannot last longer than 12 months. A significant development took place shortly after, when in a 2002 letter to the Dutch Secretary of State of Economic Affairs OPTA stated that as a telecom regulator it would start working on the formalisation of the voluntary code of conduct into legislation. However, a 2006 report written by the Dutch Ministry of Economic Affairs stated that competition in the Dutch mobile market is sufficient and the formalisation of the voluntary code of conduct into legislation is not needed. Thus, there are no SIM locking laws.

According the Finnish Communications Act of 2003,59 handset subsidies are forbidden in Finland. Their reasoning is logical as a consumer’s decision to subscribe to a specific operator’s mobile telephony service must not affect the pricing of the mobile phone such person is purchasing at the same time. Also, the use of the SIM lock is forbidden and a user has the right to connect terminal equipment to more than one subscriber connection at the same time. Along with Singapore, Hong Kong and Denmark, Finland has one of the lowest cell phone rates for both subscription and prepaid wireless service.

At a meeting of Nordic director generals on November 7, 2005, a decision was made to initiate a project intended to look at the development and regulation of the mobile markets in the Nordic countries. The purpose of the project was to gain a better understanding of developments in the Nordic mobile markets and the use of regulatory remedies. In this market, the various national regulatory authorities (NRAs) meet the same Nordic operators and it is useful to understand different measures and benefit from the experience from employing various remedies. All five Nordic NRA regulators contributed to the report, which includes Norway, Finland, Sweden, Denmark and Iceland.

According to the 2005 study called Competitions and Regulations in the Nordic Mobile Markets,60 Danish telecommunication legislation previously regulated subscription lock-ins only, including indirect lock-ins. The provision regarding subscription lock-ins means that a telecoms operator may lock a consumer into an agreement for a service for six months at the most. In the summer of 2005, this provision was supplemented by a provision on maximum lock-in periods for using SIM locks or the like in mobile telephones. This provision entails that when selling or leasing mobile telephones a telecom operator must allow the telephone to be unlocked after a maximum of six months calculated from the beginning of the subscription period, enabling it to be used with another mobile operator.

In 2006, Italians legislated on consumer protection as they call for ‘transparency supply conditions’ and better prices for services of telecommunications. Italians enacted a Resolution titled Regulations Regarding Blocking of Mobile Terminals (SIM Lock).61 Under Italian law, the carriers must specify the amount of subsidies, and subscribers can obtain unlocking codes after nine months by paying 1/2 of the listed subsidies. Also, the SIM lock must be removed within 18 months.

In France, the French Consumer Code amendments from 2006 contain provisions similar to that proposed by Canadian MP Bruce Hyer. The code forbids a tying of a product to a service. Although SIM locks are not expressly prohibited, the mobile operator must inform the consumer of the existence of a SIM lock, and the subscriber has the right to request that the lock be removed at any time. Also, no later than six months


before the conclusion of the contract the mobile operator must ‘systematically and free of charge’ provide the subscriber with a procedure to deactivate the SIM lock. In the case that one wants the lock removed before the six-month period provided by the law, operators may charge a fee for removing the SIM lock prior to the six-month deadline. This provision differs form those in Bill C-560 as it offers more protection to the consumer.

On the other side of the world, the Telecomm Authority of Hong Kong emitted a statement in February 15, 2007 titled: Way forward of ‘SIM Lock’. The regulator stated that in consideration of the European Commission’s findings on SIM locks, it will not restrict operators and dealers to use the SIM lock for protection of subsidy of equipment provided that the customers are well informed of the amount of any subsidy, the SIM lock arrangement, and the conditions for repayment of the subsidy to unlock the SIM locks at the time the equipment is purchased. The TA would allow operators and dealers to deploy SIM locked equipment to customers for the purpose of deterring theft and fraud or for the enforcement of the rental or instalment contracts with the customers concerned. However, to govern such deployment of SIM locks, certain conditions will apply.62 If a SIM lock is solely used for the purpose of tying customers to networks other than for the purposes stated in (a) and (b) conditions, they state it may adversely affect competition in the mobile industry. Therefore, this practice is forbidden.

The trend has even spread to South America where in 2008, Honduras enacted a consumer protection law. The Ley de Protección al Consumidor or Consumer Protection Act regulates all activities of any goods and services providers stating the principles that they must follow in order to operate in this country. Article 20 prohibits providers to “place seals [...] which prevent the consumer to make free use of the product, except those mechanisms used by the manufacturer for warranty purposes”. In Brazil, and according to their 2002 consumer protection law, the mobile carrier must inform the consumer of the existence of a SIM lock. The maximum SIM-locking period is 12 months and the law requires the carrier to unlock for free of charge after 12 months.

Strict legislation in the telecom sector is the key in order for consumers to benefit from good prices and better service. In Israel, there is pending legislation with regards to banning SIM locks. According to the Arrangements Law submitted to the Israeli Cabinet on July 16, 2010, this legislation would forbid carriers to lock their handsets, and any handsets already in possession of the customer must be unlocked for free.63

5 Why not ban?

John Lawford, Counsel with the advocacy group Public Interest Advocacy Centre, says that as smart phones become more advanced and expensive, consumers will increasingly keep them beyond the two or three-year contracts common in Canada. “The trend in consumer protection is to let people use their devices in a more open manner, and that’s good for competition and good for consumers”, Mr. Lawford said. “It may not be as good for really fat profit margins at the few companies that we have, but I think it’s the direction that we’re moving in”.64

One would think, why not be able to unlock your cell phone? So logically, why not support Bill C-32 or argue in favour of the DMCA’s §1201 exception? First, Bill C-32 does not let you unlock an iPhone, for example; it is a misunderstanding that it does.


Bill C-32 exempts cell phone users from incurring in copyright infringement if they circumvent digital technologies placed by manufacturers. It allows users to jailbreak their iPhone to change cellular networks but it does not allow it done through modifying the firmware. We know that in order to unlock the iPhone, it needs to be jailbroken first. So even if jailbreaking (never an easy process) was exempted from the circumvention prohibitions, it would still void your warranty, possibly damage your phone and it is simply not consumer-oriented.

The circumvention of cell phone SIM locks as addressed in Bill C-32 by means of an exemption from the prohibition of circumvention of TMPs, or even in Bill C-560, by informing the consumer of the existing locks on their phones, could be a victory for wireless mobile consumers. However, if the average, prudent and reasonable Canadian consumer understands the importance of banning SIM locks, supporting Bill C-32, Bill C-560 or even Ontario’s Bill 133 would not suffice.

Canada has a chance to be a world pioneer if it prohibited locked phones in Canada. Research shows that if SIM locks were banned, Canadian consumers would get better cell phone deals, less onerous contract term length, and better service through the development of a healthy free market competition. The perfect legislative example comes from Singapore and how banning changed market competition and how regulation lowered cell phone service rates to the one of the lowest in the world. Examples like Singapore can create a need for Canadian Members of Parliament to protect a basic property right, the right to the use and enjoyment of personal property. Digitalism and the internet have not changed that, the constitution protects digital property rights and locking is a recognisably archaic practice based solely on profits and consumer retention for wireless network companies.

The Canadian Parliament needs to respond to consumer’s feedback and their best interest because they do not lack such feedback. It should be unacceptable for the average Canadian to live in a developed country where the most profitable telecommunications companies in the developed world continue to practice anti-competitive behaviour that not only is ‘anti-consumer’ but detrimental to the cell phone market. Canada has the most expensive prices in terms of cost per prepaid minute and cost per prepaid text. Meanwhile, government agencies like the CRTC do little to regulate such market, and a specific Complaints Commissioner (CCTS) created for consumer complaints on telecommunications market has a very little number of resolutions, mostly due to ‘out of scope’ complaints.65

Change is coming and a good example of it is Telus Corp., a Canadian telecom in the midst of transforming its wireless contract strategy. The CMO of Telus, the third-largest carrier in Canada with more than 6.9 million users, said in an interview that they want to focus on a customer experience ‘as transparent as possible’.66 He added that they are introducing “several new initiatives now through the first quarter of next year it hopes will curry loyalty with consumers in an era in which clients can uproot to a rival with increasing ease”. The announcement includes a first in market practices for Telus, which includes plans to eliminate costly termination fees for cell phone and smart phone contracts and the person would only be liable for the balance remaining on an original subsidy the carrier paid. This is yet another sign that mobile carriers are changing the rules in the face of competitive and now legislative pressures.


6 Conclusions

Every digital lock is made to be able to be unlocked and hackers are plentiful. Almost all wireless communications providers use software locks to tie a customer’s handset to their service network. The SIM lock on any cell phone should be removed from the trade of mobile phones. The vast majority of mobile customers cannot unlock their phones without circumvention. Most cell phone customers are not even aware their phones are locked. Notwithstanding, allowing customers to change networks does not adversely affect the market for handsets.

Both providers and manufacturers are guilty in the SIM lock scheme, as it is a way to keep their subscribers from buying somewhere else and not benefiting from the free market economy by choosing the cell phone they prefer. Cell phone users need to be protected by new legislation, a model and worldwide standard in cellular technology. Banning SIM locks would be ideal for the Canadian market bearing in mind it is the most expensive country in the world to have a cell phone plan.

It goes without saying that the customer’s financial obligation under the service contract is unaffected by unlocking. Unlocking merely allows the customer to use the same handset with a different carrier, paying an additional amount to that carrier for the service during the period of the contract, or to take their handset to a new provider if desired at the end of the contract period. If the Canadian Parliament prohibited locking instead of exempting unlocking from copyright infringement prohibitions the market for wireless services and handsets would grow exponentially. Banning SIM locks will not raise the consumer price of handsets. In fact, it may lower the price of handsets and of wireless service by making mobile phone markets more competitive.

Canadian telecom critics agree that costs are generally higher for most items in Canada. Yet, Canada is also a much smaller market than the USA, with 12% of the US population. Canada’s ‘Big Three’ telecom providers, who sink billions of capital into building out wireless and wired networks across the country, are frequently on the receiving end of consumer anger. “While profitable they are getting bruised by public policy”.67 “These companies … say they are engaged in furious competition with each other, experience huge swings in subscriber additions each quarter, and face declining legacy businesses even as they are lambasted for having the advantage of being former monopolies”.

Even so, unlocking is fair and should be a users right. Canadian legislation and future case law should demonstrate that users and consumers are the reason behind the technological developments of such phones and are what drive the telecom industry forward; ultimately the user being their biggest motivation for progress and innovation. While it may economically benefit carriers to lock, they have no legitimate interest in forcing customers to purchase a new handset simply to get new wireless service or continue with an inferior provider simply because said consumer invested in a handset. The user of a cell phone should want your goods and services and should not be forced to buy them because they want a shiny new iPhone 4 with FaceTime and HD video recording.


Notes 1 A SIM card is a ‘subscriber identity module’ on a removable card that securely stores

the service subscriber key used to identify a subscriber on mobile telephony devices. The SIM card allows users to change phones by simply removing the SIM card from one mobile phone and inserting it into another mobile phone or broadband telephony device. Wikipedia, Subscriber Identity Module, available at http://en.wikipedia.org/wiki/Subscriber _Identity_Module.

2 Mobile service uses different technological standards, and there are presently three main mobile networks in the USA, GSM, CDMA and TDMA. Customers access these networks with mobile phones, or handsets, compatible with one or more of these standards. CDMA phones do not necessarily work on GSM networks. However, a CDMA phone is capable of operating on any CDMA network.

3 SIM lock (also ‘simlock’, ‘network lock’ or ‘subsidy lock’) is a capability built into GSM phones by mobile phone manufacturers. The use of SIM cards is mandatory in GSM devices. Network providers use this capability to restrict the use of these phones to specific countries and network providers. Most cell phone carriers program their handsets with SIM locks to prevent them from operating if a different SIM card is inserted into the handset. Wikipedia, SIM Lock, available at http://en.wikipedia.org/wiki/SIM_lock.

4 Thompson, H., Canadian Wireless Subs Predicted to Top 30 Million by 2015, Digital Home, available at http://www.digitalhome.ca/2010/02/canadian-wireless-subs-expected-to-top-30-million-by-2015/.

5 Id. 6 Li, C. and Ninan, B. (2010) An International Comparison of Cell Phone Plans and

Prices, New America Foundation, Open Technology Initiative, October, available at http://www.newamerica.net/publications/policy/an_international_comparison_of_cell_phone_plans_and_prices.

7 In Canada and USA, consumers have the highest minimum monthly charge for a complete postpaid cell phone service at $67.50 and $59.99 respectively. Other countries that follow a similar cost structure at lower rates are UK at $32.40, Denmark at $39.00 and Finland at $40.10. These costs are based on plans where consumers are charged for a preset amount of voice minutes, texts and/or data amount irrespective of the minimum amount of service they use. Consumers do have the option of choosing higher preset limits if their usage volume is higher. After going above the preset threshold, consumers are charged by high per usage rates. Pay-per-use: Following a different business model, operators in countries like India and Japan charge as per unit of usage along with a small monthly fee of $12.90 in India, $18.60 in Japan. Another country that follows this cost structure at a higher monthly minimum rate in addition to usage charges is South Korea at $36.20. A combination of preset limit and pay-per-use: In the case of Hong Kong, Taiwan and Sweden, which have total price figures of $13.50, $23.74 and $34.05 respectively, customers are charged as per their usage with a slight relation to the type 1 case above. A minimum monthly amount is charged to consumers but this charge can be used towards paying for voice minutes, text or data. After customers cross the minimum monthly threshold, they are charged per unit of usage rates (http://www.newamerica.net/ node/38544).

8 See Connors, J. (2009) Breakdown of the TELUS ‘Clear Choice Rate Plans’, Mobile Syrup, 4 November, available at http://mobilesyrup.com/2009/11/04/breakdown-of-the-telus-clear-choice-rate-plans/.

9 CanadianBusiness.com, Rich 100 List, available at http://list.canadianbusiness.com/rankings/ rich100/2010/ranking/Default.aspx?sp2=1&d1=a&sc1=0.

10 Lynch, M. (2007) ‘Global wireless matrix’, Fourth Quarter. 11 The CRTC is an independent public organisation that regulates and supervises the Canadian

broadcasting and telecommunications systems. The CRTC does not regulate newspapers, magazines, cell phone rates, the quality of service and business practices of cell phone companies, or the quality and content of TV and radio programmes. Canadian


Radio-television and Telecommunications Commission (CRTC), FAQ’s, available at http://www.crtc.gc.ca/eng/backgrnd/brochures/b29903.htm.

12 Canadian Radio-television Telecommunications Commission (CRTC), FAQ’s, supra. 13 Canadian Radio-television and Telecommunications Commission (CRTC), Cellphone or

Wireless Telephone Services: Rates, Quality of Service and Business Practices, available at http://www.crtc.gc.ca/eng/INFO_SHT/t1021.htm.

14 Bill C-560, An Act Respecting the Locking of Cellular Telephones, 3rd Session, 40th Parliament, 2010, House of Parliament, available at http://www2.parl.gc.ca/House Publications/Publication.aspx?DocId=4640240&Language=e&Mode=1.

15 Currently, ‘Canada’s big wireless companies put locks on cell phones that prevent users from taking the phone to other carriers’, explained the newspaper. This is due to a combination of factors: the carrier kicks in a subsidy to reduce the cost of handsets in exchange for a contract, works with handset makers to optimise a phone’s compatibility with a network, and profits when people roam internationally and are unable to pop a foreign provider’s SIM card into their handsets.

16 Read, B.B. (2010) ‘Canadian wireless firms could be forced to unlock cell phones’, TMC.net Legal, 17 June, available at http://legal.tmcnet.com/topics/legal/articles/89022-canadian-wireless-firms-could-be-forced-unlock-cell.htm.

17 Bill C-32, An Act to Amend the Copyright Act, 3rd Session, 40th Parliament, 2010, House of Parliament, available at http://www2.parl.gc.ca/HousePublications/Publication.aspx?Docid =4580265&File=69#15.

18 Bill C-32, supra, s. 41.1(1). 19 ‘Circumvent’ means: […] to descramble a scrambled work or decrypt an encrypted work or to

otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner. Bill C-32, supra, s. 41.

20 According to Section 41, ‘technological protection measure’ means any effective technology, device or component that, in the ordinary course of its operation: (a) controls access to a work, to a performer’s performance fixed in a sound recording or to a

sound recording and whose use is authorised by the copyright owner; or (b) restricts the doing – with respect to a work, to a performer’s performance fixed in a sound

recording or to a sound recording – of any act referred to in Section 3, 15 or 18 and any act for which remuneration is payable under Section 19. Bill C-32, supra, s. 41.

21 Paragraph 41.1(1)(a) does not apply to a person who circumvents a technological protection measure on a radio apparatus for the sole purpose of gaining access to a telecommunications service by means of the radio apparatus. Bill C-32, supra, 41.18(1).

22 Marketwire (2010) Government of Canada Introduces Proposals to Modernize the Copyright Act, Marketwire, 2 June, available at http://www.marketwire.com/press-release/Government-of-Canada-Introduces-Proposals-to-Modernize-the-Copyright-Act-1270199.htm.

23 Copyright Act, supra. 24 Geist, M. (2010) Setting the Record Straight: 32 Questions and Answers on C-32’s Digital

Lock Provisions, June. 25 See http://www.rogers.com/cms/html/ophone_vpterms.html. 26 The contract must include a description of any service offered as a premium, the value of the

economic inducements given by the merchant in consideration of the contract (premiums or rebates on the price charged for goods or services purchased or leased, etc.), the term and expiry date of the contract, and the circumstances in which the consumer is allowed to rescind, cancel or amend the contract and, to the extent that same are lawful, the terms and costs associated with doing so. The contract must also indicate the formalities that must be fulfilled by the consumer in order to terminate the contract upon its expiry.

27 Read, B.B., supra.


28 Bill 60, An Act to Amend the Consumer Protection Act and Other Legislative Provisions, National Assembly Thirty-ninth Legislature, First Session, 25 June 2009.

29 Consumer Protection Act, R.S.Q. c. P-40.1. 30 Librarian of Congress, Exemption to Prohibition on Circumvention of Copyright Protection

Systems for Access Control Technologies, 37 CFR Part 201, Library of Congress, available at http://www.copyright.gov/1201/.

31 In the USA, title 17 U.S.C. § 1201 (a)(1) provide a rulemaking procedure to be followed by the Librarian of Congress, through which, the prohibition of § 1201 (a)(1) shall not apply to persons who are users of “a copyrighted work which is in a particular class of works, if such persons are, or are likely to be in the succeeding 3-year period, adversely affected by virtue of such prohibition in their ability to make non-infringing uses of that particular class of works under Title 17”. Rulemaking Authority for the Librarian of Congress in 17 U.S.C. § 1201 (a)(1) (B) and (C).

32 Comments of Wireless Alliance LLC & Robert Pinkerton, to Library of Congress (hereinafter ‘Comments to Library of Congress’, Copyright Office, In re Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 2006, available at http://www.copyright.gov/1201/2006/comments/granick_wirelessalliance.pdf.

33 See citation below, citing T-Mobile Terms and Conditions, Paragraph 8, ‘A T-Mobile phone may be programmed to accept only a T-Mobile SIM card’, T-Mobile.com, available at http://www.t-mobile.com/info/legal/terms_cond.asp.

34 Comments to Library of Congress, supra. 35 37 CFR Part 201, DMCA Rulemaking decision by the Copyright Office of the Library of

Congress published on 24 July 2010 [interpreted the anti-circumvention provision of the DMCA, specifically 17 U.S.C. §1201 (a)].

36 In the USA, critics of the DMCA noted the progress in addressing some of the DMCA’s most troubling consequences by creating exceptions for unlocking and jailbreaking cell phones and circumventing DVD locks in several circumstances (though the decision is hardly a panacea given the restrictions on distributing circumvention tools, contractual restrictions and the absence of a general right to circumvent for lawful purposes).

37 TracFone Wireless, Inc. v. Dixon, 475 F. Supp. 2s 1236, 1238 (M.D. Fla., 2007). 38 Chamberlain Group v. Skylink Technologies, supra. 39 Lexmark v. Static Control Components, 387 F.3d 522 (6th Cir. 2004). 40 StorageTek v. Custom Hardware Engineering & Consulting, 421 F.3d 1307 (Fed.Cir. 2004). 41 Exemption to Prohibition, supra. 42 CCH Canadian Limited v. Law Society of Upper Canada, [2004] SCC 13. 43 Ibid, at 364. 44 Ibid, at 366. 45 TAS Fines M1 for Unauthori[s]ed Frequency Transmission and Issues Warning Over Sale of

SIM-Locked Cellular Phones, Info-communications Development Authority of Singapore, Media Release, 8 September 1997 (http://www.ida.gov.sg/News a...etPagetype=20).

46 For an analysis of international agreements regarding copyright, please see WIPO, ‘International Bureau of the WIPO’, available at http://www.wipo.int/copyright/en/ activities/pdf/international_protection.pdf.

47 The WIPO Copyright Treaty (1996), CRNR/DC/94. 48 WIPO Copyright Treaty, supra. 49 Geist, M. (2010) U.S. Developments Demonstrate Canada’s C-32 Digital Lock Rules More

Restrictive than DMCA, Monday, 26 July, available at http://www.michaelgeist.ca/ content/view/5227/125/.

50 Geist, supra.


51 Granick, J. (2007) ‘Legal or not, IPhone hacks might spur revolution’, Wired Magazine Online, 28 August, Wired.com, available at http://www.wired.com/politics/onlinerights/ commentary/circuitcourt/2007/08/circuitcourt_0829#ixzz17H11FkY6.

52 Currently, the Librarian of Congress’ Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, reads: “computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network”. 37 CFR Part 201, Library of Congress, available at http://www.copyright.gov/1201/.

53 In the Matter of Bundling of Cellular Customer Premises Equipment and Cellular Service, CC Docket No. 91-34, 1992 WL 689944 (F.C.C. 10 June 1992), at p.6.

54 1992 FCC Bundling Ruling, Paragraphs 8, 15. 55 47 U.S.C. 251 (b)(2). 56 Telecommunications Act of 1996, HR 155, S 652, available at http://thomas.loc.gov/cgi-

bin/query/F?c104:4:./temp/~c104W0zTCP:e0. 57 Apple’s iPhone 4 contract subject to a $35 activation fee. Terms may change at any time,

without notice by the sole and absolute motivation of carrier. Visit http://www.rogers.com for details.

58 Directive 1999/44, EU Commission in European Parliament and Council, 25 May 1999, available at http://www.brittany-internet.c.../Default.aspx.

59 ‘Finnish Communications Act of 2003’, available at http://www.finlex.fi/en/laki/ k...n20030393.pdf.

60 ‘Nordic mobile markets report’, 15 November 2005, available at http://www.itst.dk/ teleinfrast...ilrapport.pdf. 6261 Regulations Regarding Blocking of Mobile Terminals (SIM Lock), Resolution No. 9/06/CIR, 21 February 2006 (http://www.agcom.it/default.as...arch=SIM_lock).

62 (a) For anti-theft and anti-fraud applications, operators and dealers should inform thecustomers clearly about such ‘SIM Lock’ arrangement and also provide them with the necessary procedures and methods of unlocking the equipment by the customersthemselves or by the operators and dealers free of charge to the customers;

(b) Where the equipment is rented or paid by instalments by the customers, operators and dealers will have to advise the customers concerned about the SIM locking arrangementand provide them with the detailed unlocking procedures if they have already paid up thetotal equipment cost (http://www.ofta.gov.hk/en/tas/...ta970220.html).

63 Arrangements Law, Israeli Cabinet on 16 July 2010, available at http://www.ynet.co.il/articles...21978,00.html.

64 Read, B.B., supra. 65 The CCTS cannot take customer service complaints. Also see Appendix #5 for CRTC’s

website screenshot. 66 Telus Dials Up New Contract Strategy, supra. 67 Read, B.B., supra.

Cell Phone Freedom Act: : a small step or a giant leap in Canadian policy making?

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