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Sprint Nextel Corporation (S), AT&T Inc. (T), Verizon Communications Inc. (VZ): Will You Be Trapped by Your Wireless Provider?

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The country’s wireless providers may have Groundhog’s Day circled on their calendars. Already seeing a boost in price during the week from economic data, AT&T Inc. (NYSE:T)Sprint Nextel Corporation (NYSE:S), and Verizon Communications Inc. (NYSE:VZ) may have a reason to celebrate once a new rule guarding phone usage goes into effect.

The term “jailbreak” just got a little more appropriate
Jailbreaking a phone refers to a person unlocking his or her smartphone, which allows the person to use any cellular network with the same device. This was often the thorn in a wireless provider’s side, because customers were able to switch carriers if they no longer liked their current network. But all of that changes on Feb. 2, when a new exemption under the Digital Millennium Copyright Act will make jailbreaking a smartphone a crime that serves out fines or jail time.

AT&T Inc. (NYSE:T)The phone carriers will be able to file suit against customers for damages caused by the unlocked phones, such as contract loss, etc. — though the maximum fine levied would be $2,500. In the case of people looking to profit from jailbreak phones, the maximum damages could reach as high as $500,000.

Investors in the telecom businesses should consider this ruling, though questionable, a win for their stocks. There has always been a lot of competition in the space, with customers taking advantage of subsidized phone deals (think $600+ iPhone 5s for $199 and a two-year contract), and then moving to a new network, or selling the phone. And some of that competition was prevalent in the days leading up to the new rule’s start date.

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