Carriers Band to Fight Cellphone Theft

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In New York, 81% percentage of electronics thefts involve cellphones.

(by Rolfe Winkler, The Wall Street Journal, WSJ.com) ? The nation?s major wireless providers have agreed to a deal with the U.S. government to build a central database of stolen cellphones?part of a broad effort to tame an explosion of thefts nationwide.

The database, which the wireless companies will build and maintain, will be designed to track phones that are reported as lost or stolen and deny them voice and data service. The idea is to reduce crime by making it difficult or impossible to actually use a stolen device, reducing resale value.

Currently, Verizon Communications Inc. and Sprint Nextel Corp. block phones that are reported stolen from being reactivated. AT&T Inc. and Deutsche Telekom AG?s T-Mobile USA don?t. All four have agreed to be part of the new database.

?New technologies create new risks,? said Julius Genachowski, chairman of the Federal Communications Commission, which negotiated the database proposal. ?We wanted to find a way to reduce the value of stolen smartphones.?

Cellphone theft is one of the fastest growing crimes in the U.S., law-enforcement officials nationwide say. The deal between the FCC and the wireless carriers is partly the result of pressure from frustrated police chiefs. The Major Cities Chiefs Association, an affiliation of 70 police chiefs from large cities across the U.S. and Canada, published a resolution in February calling on the FCC to require telecom companies to implement technology to disable stolen devices.

Behind the increase in crime: A lucrative market for used phones. Thieves can sell pilfered devices to local merchants or street-corner middlemen?or hawk them on sites such as eBay.com, Amazon.com or Craigslist.org, where a used iPhone, for instance, can fetch several hundred dollars.

In New York there were more than 26,000 incidents of electronics theft in the first 10 months of 2011?81% involving mobile phones?according to an internal police-department document reported by the New York Daily News.

The report said electronics are now the most stolen type of property, surpassing cash. In Washington, D.C., cellphone-related robberies jumped 54% from 2007 to 2011 according to the Metropolitan Police Department.

Details of the national stolen-phone database have yet to be worked out, but a broad outline has been agreed to.

Wireless phones that have been reported stolen to the carrier will be listed in the database using unique serial numbers associated with mobile gadgets. The carriers will block listed phones from accessing carrier networks for voice and data service.

Carriers will roll out their own individual databases within six months. The individual databases will be integrated and centralized over the 12 months thereafter. Smaller, regional wireless carriers are expected to join the database over two years, according to a person familiar with the plan. As part of the agreement, wireless carriers will also roll out initiatives to encourage mobile-phone users to set up passwords on their devices to deter theft.

Design of the stolen-phone database is complicated by the fact that the carriers use very different cellphone technologies. Verizon and Sprint operate what is known as a CDMA network. A CDMA handset possesses an electronic serial number on the device itself, which enables the two companies to block handsets from being reactivated if they are stolen.

AT&T and T-Mobile, by contrast, use a different technology, GSM, which identifies individual handsets by a tiny, removable SIM card. This makes GSM phones particularly attractive to thieves, since it is easy to install a new SIM card on a stolen device.

Despite the differing network technologies, it is important to have one central database of stolen phones. One reason is because, as carriers switch their networks to the next-generation LTE* standard, it could become easier for thieves to transfer stolen phones among them. *[NOTE: 3GPP Long Term Evolution, referred to as LTE and marketed as 4G LTE, is a standard for wireless communication of high-speed data for mobile phones and data terminals. It is based on the GSM/EDGE and UMTS/HSPA network technologies, increasing the capacity and speed using new modulation techniques.]

Officials from AT&T and T-Mobile said the carriers are working on technologies to block reuse of stolen phones on their networks. ?We are working toward an industrywide solution to address the complexity of blocking stolen devices from being activated on ours or another network with a new SIM card,? T-Mobile said in a statement. ?This is not a simple problem to solve.?

According to an FCC official, the SIM-card problem will likely be solved by the carriers? making an additional check to ensure that the devices themselves are authorized to work on the network, not just the SIM card.

A Sprint official voiced support for the national database plan. An official from Verizon declined to comment late Monday.

Similar stolen-phone databases are already in use abroad, including in the U.K., Germany, France and Australia. The U.K. database was set up in 2002. Australia?s was set up in 2004. Crime hasn?t stopped, but the number of incidents has declined.

In London, cellphone-related crimes last fiscal year averaged roughly 8,000 per month, a decline from more than 10,000 per month in the fiscal year ending April 2004, according to the U.K.?s National Mobile Phone Crime Unit.

That was despite a near-doubling in the number of handsets in circulation over that time, according to Jack Wraith of the Telecommunications U.K. Fraud Forum, a telecom industry group that helped with the U.K. database.

Mr. Wraith credits the database with the fact that crime hasn?t grown alongside the dramatic increase in total number of handsets.

The databases aren?t perfect, said David Rogers, a mobile security expert at consulting firm Copper Horse Solutions in London. Phones that are blocked from receiving voice service ?still have lots of functions.? They can still connect to the Internet via Wi-Fi, for instance, as well as play music or games.

As a result, tablets that use only Wi-Fi connections will receive no protection under the proposed plan. Tablets that connect to carriers? cell networks are expected to be covered, according to a person familiar with the matter.

Another problem is that stolen phones often are exported to China and countries in Latin America, Africa and elsewhere for sale. The agreement forged by the FCC calls for U.S. carriers to make their stolen-phone database interoperable with others abroad, though many developing countries don?t have stolen-phone databases in place.

Tech-savvy thieves might be able to use software to alter the identity number on stolen devices. In the U.K., altering such numbers without authorization is a crime. It is currently legal in the U.S., though members of Congress are expected to propose legislation to make it a crime, according to a person familiar with the matter at the FCC.

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved. Reprinted here for educational purposes only. Visit the website at wsj.com.

Questions

1.? The first paragraph of a news article usually answers the questions who, what, where and when. In this article, only the who and what are provided in the first paragraph; describe the who and what of this news item.? (NOTE: The remainder of a news article provides details and the why and/or how.)

2.? What is the reason for building a central database?

3.? a) What procedure do Verizon and Sprint currently follow if one of their customers' phones are stolen?
b)? Which two major phone companies do not use this procedure? Why not?

4.? Why is the FCC initiating this database?

5.? Washington D.C. saw a 54% increase in cellphone robberies in the past four years; in New York City 81% of the 26,000 electronics thefts in 2011 were cell phone thefts.? Why has there been such a large increase in cell phone thefts?

6.? In general, how will the national database work?

7.? What main challenge do the designers of the national database face? Be specific.

8.? a) What will make it easier in the near future for thieves to transfer stolen cell phones between different phone carriers?
b)? How are AT&T and T-Mobile working to combat this problem?

9.? Why might the databases not deter some criminals from continuing to steal cell phones?

10. How do you think establishing and maintaining a national database will affect cell phone costs?

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Background

THE FEDERAL COMMUNICATIONS COMMISSION (FCC):

• The Federal Communications Commission (FCC) is an independent agency of the U.S. government ? it was established by the Communications Act of 1934?and is charged with regulating all non-federal government use of the radio spectrum (including radio and television broadcasting), and all interstate telecommunications (wire, satellite and cable) as well as all international communications that originate or terminate in the U.S.
  
• The FCC has an estimated 2011 budget of $335.8 million ...and has a proposed budget of $354.2 million for 2012...
• The FCC has 1,898 federal employees.

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