Carriers Conspiring to Block Smartphone Theft Technology?

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wireless carriers
(Last Updated On: December 16, 2013)

With the rising number of smartphone thefts has come a wave of new technologies that can help prevent or mitigate losses from theft. That is, if your carrier will let it. On Tuesday, New York Attorney General Eric Schneiderman sent letters to top executives of AT&T, Verizon Wireless, T-Mobile, Sprint and US Cellular inquiring into their recent decision to prevent Samsung from featuring a “kill switch” in carrier-approved smartphones. A remote kill switch could disable a stolen phone, rendering it worthless to thieves looking to sell it on the black market.

Why would the wireless carriers decide to block a technology that prevents smartphone theft? One of the possible notions Schneiderman now is looking into whether the nation’s phone companies are rejecting a potential solution to phone theft because it will cut into sales of phone insurance.

The top four wireless carriers will gain about $7.8 billion this year in insurance premiums from their customers, according to an estimate by Warranty Week, an industry trade publication. Asurion, a phone insurance company that pays the wireless carriers for each policy they sell, made an estimated $98 million in profit in 2010, according to Businessweek. Phone insurance plans normally cost between $7 and $11 per month, and require consumers to pay deductibles as high as $200 for a replacement phone.

These same carriers are blocking not just a hard “kill switch” but also software solutions which can actually track a lost or stolen smartphone. Absolute Software markets itself as “Absolute Software specializes in technology and services for the management and security of mobile computers, netbooks, and smartphones,” and has recovered more than 30,000 devices — mostly laptops and PCs — over the last two decades in more than 104 countries.

However their efforts to extend their service to smartphones has been thwarted by the very carriers that have nixed the kill switch. Executives said they had planned to embed their software, which can also disable stolen phones, in all new Samsung Galaxy smartphones and tablets this year. But wireless carriers, which decide which features are embedded in the devices they sell, have rejected the technology, according to Absolute Software executives.

But while top law enforcement officials have demanded that phone manufacturers create a kill switch to reduce phone robberies, Absolute Software executives say they would prefer their customers don’t use the feature. That’s because killing the phone prevents them from gathering crucial evidence that could help them recover the device.

“Once you kill the phone, you kiss $600 goodbye,” Clapham said.

For $30 a year, Absolute Software can erase sensitive data on the phone, activate a kill switch that renders the handset inoperable, or attempt to recover a stolen device. The company does not yet guarantee that it will replace the stolen phone if it can’t retrieve it.

“The carriers blocked us,” said Ward Clapham, vice president of investigations at Absolute Software.

As for Schneiderman, he has opened the official discussion into these matters, publicly stating: “If carriers are colluding to prevent theft-deterrent features from being pre-installed on devices as means to sell more insurance products, they are doing so at the expense of public safety and putting their customers in danger.”