It is not often that I applaud government intervention. However, the Federal Communications Commission (FCC) is getting the major mobile phone providers to create a serial number database for stolen cellphones, and I say it’s about time.
Verizon and Sprint/Nextel already have campaigns in place, and they soon will be joined by AT&T, T-Mobile, and Nex-Tech. Previously, customers who had their cellphones either lost or stolen had no recourse in preventing their mobile devices from being re-activated and sold on the black market. Now, once a phone is reported as lost or stolen, the carrier will disable it.
So did the majority of wireless carriers fail to initiate their own databases before being strong-armed by the FCC’s program?
For one thing, mobile phone contracts are very lucrative for carriers. As many of us know, some of these smartphones, iPhones, and BlackBerry devices can cost as much or more than a hard drive. Signing a two-year contract with a major carrier brings the cost of these products considerably lower. Contracts are cash cows for service providers.
In the case of a lost or stolen device, wireless providers get the existing customer to either carry insurance (more money), purchase a new phone and renew their contract (more money), or pay a reactivation fee (more money). They also gain an opportunity to have that lost or stolen phone use their service despite being sold on the black market (still more money).
Now, basic economics would prove that if there is no second life on the black market once a phone has been reported stolen or lost, then the resale market would dry up and disappear. Therefore, an ounce of prevention is worth a pound of cure.
Two of the more popular spots to fence mobile phones are Craigslist
and eBay. Although there are legitimate units available, many are not. On any given day, Craigslist (NYC), offers over 500 phones for sale, including SIM card cutters and other questionable accessories.
So, after years, help is on its way. No longer will the majority of major carriers piggyback off the handcuffed consumer. However, this does not solve the entire problem. For example, both T-Mobile and AT&T networks can be accessed by removing a SIM card from a phone. Unless mobile providers find a new way to electronically identify a lost or stolen phone, they remain vulnerable.
On a brighter note, the nationwide database of lost or stolen cellphones will enable each carrier to disable a specific serial numbered phone. The agreement between the FCC and the carriers is scheduled to be phased in over the next 12 months.
In the meantime, there are a number of preventive measures that consumers can apply, including a range of security apps.
For Apple devices, including the iPhone 4, iPads 1 and 2, and the fourth-generation iPod, the Find My iPhone app is available.
For BlackBerry and most Android phones, GadgetTrak
uses WiFi tracking software rather than 3G or 4G technology.
There is also publicly available information on ways to secure, lock, and use cellphone passwords effectively. And products exist to help users remotely disable lost or stolen cellphones.
But more is needed. In major US cities, law enforcement officials say that cellphone thefts account for up to 40 percent of robberies. “It is a big crime trend, and that is what the police chiefs brought to our attention," said FCC chairman Julius Genachowski when the new database was announced last week.
Senator Charles Schumer (D-NY), who proposed the FCC's arrangement, said in a statement: “Our goal is to make a stolen cell phone as worthless as an empty wallet.”
— Chris Poley has been a professional trader for more than 20 years.