AT&T Sues Pre-Paid Phone ‘Traffickers’

AT&T has filed a lawsuit against Wireless Exclusive, L.L.C., for pre-paid phone trafficking. What on earth is pre-paid phone trafficking? Well, Wireless Exclusive is allegedly buying pre-paid phones in bulk (or making several smaller purchases), unlocking them, and selling them overseas for a premium.

Excuse me, but I’m not quite sure I understand how this is illegal. Supposedly, signing a contract with AT&T gets you a subsidy on a handset, correct? Thus, purchasing a pre-paid handset at ‘full retail’ to use with no contract should entirely eliminate that subsidy, right? Wrong. Turns out, AT&T (and other carriers) still offer a subsidy on those prepaid phones, assuming purchasers will actually use them.

So now, these purchasers, who did not sign any sort of contract or other binding agreement, are exercising freedom to unlock these handsets and sell them elsewhere. I suppose that I also broke the law when I purchased a Nokia N75 from AT&T a while back, unlocked and unbranded it, and sold it online? The contract is still in place, and will be for who knows how long.

In any case, AT&T (and T-Mobile and Nokia in the past) have filed a lawsuit claiming that the practice ‘amounts to theft of subsidies.’ Hmmm, I thought buying a phone without a contract eliminated that subsidy?

Given that pre-paid handsets do not require anything other than my birthday to purchase and activate, I fail to see how this is illegal in the slightest bit. Sounds to me like AT&T (and any other carrier) is offering a discount in good faith to customers, and when that goes awry, turn to the legal system.

Via: RCRNews


4 Responses to AT&T Sues Pre-Paid Phone ‘Traffickers’

  1. Steve February 8, 2008 at 2:05 am #

    Ahh the great American wireless stranglehold. It’s time consumers told them to eff off.

  2. Ricky C February 8, 2008 at 2:07 am #

    Very interesting I wonder how this works over here in the UK! Mobile operators do exactly the same!
    I wonder how this case will work out! However in the UK on the MVNO they will give you the unlock code after spending £30 with them!

  3. PhoneBoy February 8, 2008 at 8:11 pm #

    In theory, there is an “agreement” in the phone package somewhere that says you’re supposed to use the phone only with the service. Of course, it’s unenforceable.

    PhoneBoy’s last blog post..U.S. Mobile Phones Won’t Be Turned Over To Telemarketers


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