The move would also help protect personal data on such devices, the Canadian Wireless Telecommunications Association said Thursday.
Smartphones are worth $600 to $700 and can be resold on the black market, noted association president Bernard Lord.
"With this database, it makes that a lot less attractive because the buyer of the stolen phone will not be able to connect to any network in Canada," Lord said from Ottawa.
"It eliminates the incentive for stealing a device."
The idea is also to reduce the black market value of a smartphone in the eyes of criminals, Lord added.
Once consumers call their wireless carrier to report their smartphone lost or stolen, the device's internal identification number goes on the electronic blacklist.
Lord said even though more smartphones are lost than stolen, law enforcement officials have raised concerns about the issue.
The database for the Canadian wireless industry will be up and running by September 2013 and Canada's carriers will also be contributing to an international database to help prevent smartphone theft, he said.
However, consumers who have their smartphones lost or stolen are "not off the hook" for paying their smartphone contracts.
A website will also be set up by the association to help consumers protect their smartphone data and help protect themselves from theft.
Lord said the smartphone's ID number — called the international mobile electronic number — will be verified by carriers to make sure the device has not been lost or stolen.
The Canadian Radio-television and Telecommunications Commission congratulated the wireless industry for the initiative, but would like the database running sooner rather than later.
"I would strongly encourage the industry to implement the database before September 2013 to ensure Canadians benefit from this added protection as soon as possible," chairman Jean-Pierre Blais said in a statement.
The creation of a database and collaboration to make sure stolen or lost devices aren't reactivated will help make them less desirable to thieves, Blais said.
"The CRTC has been concerned for some time about reports of an increase in crimes involving lost or stolen cellphones."
Telus said while the wireless industry, law enforcement, and regulators all have a role to play, smartphone users need to think about where they're buying their devices.
"We ask consumers to reconsider buying phones on sites like eBay, Craigslist, or Kijiji and instead buy their devices from a verified dealer," Telus spokesman Shawn Hall said.
"If you buy a phone from Craig’s List it might be legitimate, but it could be stolen and then you will likely be unable to get it activated," he said.
Smartphone use in Canada is among the highest in the world and penetration has exceeded 50 per cent, Lord said.
Canada's wireless industry will spend about $20 million on the initiative, he said.
The United States is also taking steps to create a database that includes all of its carriers to fight the black market and their deadline is November 2013, Lord said.
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