Under pressure from the Federal Communications Commission, major cellphone carriers agreed to a new policy Thursday to allow customers to "unlock" their phones and switch providers.
Most contract phones come "locked" to one carrier. Because of a Library of Congress decision last year, customers need to obtain their carrier's permission to legally unlock their phones even after they complete their contracts.
Critics argued that the ban on unlocking was hurting consumers and stifling competition.
More than 114,000 people signed a White House petition opposing the ban. In March, the White House responded, saying that "consumers should be able to unlock their cell phones without risking criminal or other penalties."
Verizon, AT&T, Sprint, T-Mobile and U.S. Cellular agreed to the new unlocking policy Thursday.
The companies agreed to unlock prepaid phones one year after activation and all postpaid phones if customers agree to an early termination fee. The carriers must post clear descriptions of their unlocking policies on their websites.
The carriers had initially resisted the FCC's insistence that they notify customers when their devices are eligible for unlocking, but they ultimately gave into the demand.
Unlocking a phone, however, does not mean it will operate on any network. Technological barriers could still prevent some customers from switching their devices between certain networks.
"Consumers win when they are armed with the right information and know their options, especially when it comes to navigating how to unlock a wireless phone after completing a contract," Wheeler said in a statement.
CTIA, the lobbying organization for the cellphone industry, said it plans to include the policy in its bylaws.
“We believe this agreement will continue to foster the world-leading range of devices and offerings that Americans enjoy today," CTIA President Steve Largent said.