The stated purpose of the rule is to prevent or reduce fraud that results from the "cloning" (programming a legitimate ESN into a fraudulent unit in order to illegally access a cellular system). But the scope of the regulation goes further and has thus engendered much controversy. No one argues with the proposition that it ought to be illegal to clone cellular phones for the purpose of stealing service or fraudulently accessing cellular accounts. As written, however, Section 22.919 also precludes clearly nonfraudulent uses. It is a violation of Section 22.919, for example, to clone your ESN into a second unit to serve as an "extension" phone, even though you have no intention of using both units at the same time and are willing to pay all usage costs generated by both units. It is also a violation for your own cellular carrier to program the ESN of your broken phone into a loaner unit while repairs are made. Even cellular equipment manufacturers are concerned that the regulation is so narrowly drawn that many design features built into cellular phones are arguably in technical violation.

It is not always easy to compose statutes or regulations that include the targeted conduct or situation without also unwittingly encompassing other matters that have nothing to do with the matter at hand. Such problems are frequently addressed after the fact by "interpretation" of the law. The legislative or regulatory history is studied to determine the intention of the law's authors. Should this process not be applied to Section 22.919? Would it not be reasonable to assume that, because the purpose of Section 22.919 is to prevent cellular fraud, the Commission certainly could not have intended by it to proscribe nonfraudulent cloning? Well, there is good news and there is bad news. The good news is we don't have to guess at the FCC's intention. All the right questions were put to and answered by the Commission before the regulation was adopted. The bad news is the FCC's answers to those questions make very little common sense.

ESN modification and cellular cloning was a hot issue during the rulemaking proceeding in which the current version of Section 22.919 was adopted. There was no argument with the need to adopt legitimate regulatory measures to address cellular fraud, and there was no objection to rules that prohibited the cloning of cellular phones or the modification of ESNs for fraudulent purposes. But commenters specifically urged the FCC not to draw the rule so narrowly that it precluded either modification or "emulation" of ESNs in order to create nonfraudulent "extension" phones. The Commission considered and squarely rejected these arguments, stating:

[T]he ESN rule will not prevent a consumer from having two cellular telephones with the same telephone number .... We note that Commission rules do not prohibit assignment of the same telephone number to two or more cellular telephones. It is technically possible to have the same telephone number for two or more cellular telephones, each having a unique ESN. If a cellular carrier wishes to provide this service, it may.

Thus, with the stroke of a pen the Commission gave the cellular carriers an effective monopoly on the provision of cellular extension phones.

The third party programmers of extension units, outlawed by Section 22.919, typically charge a flat fee to program the second phone. With the adoption of Section 22.919, however, many cellular carriers have started to offer two or more phones on the same number--but they are imposing monthly fees in the $17 to $30 range for this optional service. At those rates many users may decide it is better to simply buy a second cellular account--and the critics say that is exactly what the cellular carriers intend.

The Commission also expressly considered and rejected suggestions that the scope of Section 22.919 be narrowed to permit ESN modification by manufacturers and authorized repair centers. The Commission responded to such suggestions as follows:

[C]omputer software to change ESNs, which is intended to be used only by authorized service personnel, might become available to unauthorized persons through privately operated computer "bulletin boards". We have no knowledge that it is now possible to prevent unauthorized use of such software for fraudulent purposes.

That shows how far wide of the mark is the Commission's thinking on this whole issue. Can the FCC--the agency attributed with the expertise in electronic telecommunications matters--actually believe that by making it unlawful to modify ESNs they will prevent thieves from acquiring the means to do so? Are they really ignorant of how relatively simple (not necessarily inexpensive, but simple) it is to clone an ESN?

There is an entire underworld industry for the laundering of stolen ESNs. The footsoldiers set up their sniffing monitors at airports, convention centers, busy highway interchanges, etc., and collect thousands of ESNs off the air from unwitting cellular users. The numbers are programmed into cellular phones and put on the street through a black market network. The units are frequently recognized as fraudulent and deactivated within days or even hours of their deployment, but not before many hours cellular airtime and long distance usage (potentially including extensive international long distance) has been misappropriated. Canceling the fraudulent account is easy-- finding the fraudulent unit and its user is not. The Commission certainly can not believe that such a lucrative operation is going to be hampered in the least by an FCC regulation making it unlawful to modify ESNs. The perpetrators of these cloning schemes knowingly and willingly assume the risk of violating many criminal statutes with potential penalties far more serious than non-compliance with an FCC policy.

Section 22.919 can not rationally be expected to have any significant effect on cellular fraud. It does, however, preclude totally nonfraudulent uses by honest members of the public. It also gives the cellular carriers a monopoly on the provision of cellular "extension" phones. This is a curious ruling for an agency that recently has been using "competition" as a mantra. Over the past few decades the FCC has consistently struck down telephone company tariff provisions that preclude uses of the telephone service that are privately beneficial to the subscriber without being harmful to the network or other users. Arguably, Section 22.919 fails under that test!

The final chapter has not yet been written. The Commission received several petitions for reconsideration and clarification of Section 22.919. The matter is still under consideration, and a decision is expected shortly. If the FCC does not adopt significant modifications to the rule, an appeal to federal court may be mounted by some industry players. In the meantime, the regulation remains on the books--an obstacle to honest users, but an entirely insignificant, if even noticed, "finger shaking" at the crooks.