Prepaid Phone Resales Annoy Carriers

The purchase of large quantities of prepaid phones for the purpose of unlocking and reselling them has grabbed a lot of attention lately after the arrest of some Palestian-Americans in Michigan on terrorism-related charges following their purchase of 1,000 of the phones. Though no link to terrorist activity has been established between the men and the phones, the incident put the spotlight on what's apparently a booming industry, and one that's annoying US mobile-phone operators. The men in Michigan reportedly bought the phones -- branded by prepay operator Tracfone -- for $20, and planned to sell them to a wholesaler for as much as $38, margins that any handset manufacturer or wireless operator would kill for. Presumably, the wholesaler would then unlock the phones and sell them for use on any GSM network, a practice Tracfone and other prepaid operators have sued in the past to stop, or ship them overseas. The only recourse operators seem to have found so far is to limit the number of phones an individual can buy at any given time, but that's easily circumvented: the men arrested in Michigan were from Texas and on what sounded like a pretty extensive road trip to load up on phones. Although the operators sell the phones as a loss leader, they can't just raise prices to try and cut out the grey-market trade, as a large part of their target market is people who can't or won't spend a lot on mobile service, and the legitimate prepaid business is booming.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team


Follow Techdirt
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Discord

The latest chatter on the Techdirt Insider Discord channel...

Loading...
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.