Chief's 'Shame on You' Prompts Agreement on Stolen Phones
April 11 (Bloomberg) -- Wireless carriers agreed to disable stolen smartphones after pressure from U.S. regulators and a police chief who told the industry "shame on you" for not helping to stem a spike in violent robberies.
"I think I have to take that back," Cathy Lanier, the Washington chief whose remarks were broadcast on March 22, said yesterday. "Today I say to the cell carriers, 'Thank you.' "
Lanier spoke at a Washington press conference where five U.S. police chiefs, a trade group leader and the Federal Communications Commission chairman announced the accord to deter theft by disabling stolen mobile gear, making it worthless.
Within six months carriers are to create a national database so companies can lock out phones, tablet computers and other stolen devices, according a summary distributed by the FCC. Carriers are to urge consumers to lock phones with passwords. The FCC said it will consider writing rules if the companies fall behind schedule.
In recent months wireless industry leaders heard calls from Congress, police and regulators for a solution to a robbery issue characterized by the FCC as a "growing epidemic." Device thefts have soared to account for more than 40 percent of robberies in New York City, according to the agency.
"We made sure that they saw the statistics, that they understood how important this was to the police chiefs," FCC Chairman Julius Genachowski said in an interview. "And to their credit they said, 'You know what? You're right. This is a priority, we're going to get it done.' "
Participate, or Not
Negotiations spilled over into the past weekend against a deadline set by the FCC to make an announcement about stolen phones, Josh Gottheimer, an adviser to the FCC chairman, said in an interview.
The FCC had said it would stage an event alongside police officers, Chris Guttman-McCabe, vice president of regulatory affairs for CTIA-The Wireless Association, a Washington-based trade group for wireless carriers and equipment makers, said in an interview.
"They were going to hold an event, and we wanted it to be a positive event," Guttman-McCabe said.
Mobile providers taking part in the agreement -- leading U.S. carrier Verizon Wireless, No. 2 AT&T Inc., Sprint Nextel Corp. and T-Mobile USA Inc. -- cover 90 percent of U.S. subscribers, the FCC said.
Goodwill at FCC
Wireless carriers "began to get political pressure for this," Jeffrey Silva, a Washington-based analyst for Medley Global Advisors LLC, said in an interview. "They would much prefer to have industry policing itself."
Carriers need more airwaves, or spectrum, to meet expanding wireless demand, Silva said.
"Maybe this will earn them some goodwill at the FCC, where they all have important pending items, and making spectrum available is top on that list," Silva said.
Lanier, the Washington police chief, said "shame on you!" to the industry during a segment that appeared on NBC's "Today" show, describing violent robberies.
"They've stepped up," Lanier said in the interview yesterday, "so I felt that they deserved for me to take that back."
Lanier said yesterday the issue hadn't been explained "in the terms that I was trying to explain it: a woman pushing a baby stroller having her jaw broken for her phone."
'Point of Gun'
Senator Charles Schumer, a New York Democrat, wrote to the FCC's Genachowski and to chief executives of AT&T, T-Mobile and Sprint in August asking for steps to reduce theft. Senator Barbara Boxer, a California Democrat, in a March 23 letter to the CTIA president, Steve Largent, urged action and in March New York Democratic Representative Eliot Engel filed a bill to require service cutoffs for stolen phones.
In a February resolution the Major Cities Chiefs Association asked the FCC to require carriers to use a database and deactivation network. The group represents police chiefs in the 50 largest U.S. cities including New York, Philadelphia, Chicago and Los Angeles.
"These devices are being taken point of gun, they're being taken after serious assaults," Charles Ramsey, head of Philadelphia's police and president of the Major Cities Chiefs Association, said at yesterday's announcement. Ramsey likened the surge to assaults and robberies a decade ago over Nike Inc.'s Air Jordan athletic shoes.
Verizon Wireless doesn't allow devices reported as stolen to be activated on its network, Kathleen Grillo, senior vice president, federal regulatory relations, said in an e-mailed statement. The company, based in Basking Ridge, New Jersey, is owned by Verizon Communications Inc. and Vodafone Group Plc. It supports the initiative announced yesterday, Grillo said.
AT&T was "pleased" to join the announcement, Jim Bugel, assistant vice president, public safety and homeland security, said in a blog posting.
Third-largest U.S. carrier Sprint cuts off phones that its customers report as stolen and supports the initiative announced yesterday, Vonya McCann, senior vice president of government affairs for the company based in Overland Park, Kansas, said in a statement yesterday.
T-Mobile, the Deutsche Telekom AG unit based in Bellevue, Washington, suspends service to accounts of phones reported as stolen, Kathleen Ham, vice president of federal regulatory affairs, said in a statement.
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