Some cell phones are designed to use a subscriber identification module (SIM) card or memory chip that stores subscriber data. The SIM card is issued by a carrier and provides cellular service by activating any phone it is placed in. However, a locked phone will only recognize a SIM card from a particular carrier. If the cell phone is unlocked, it will recognize a SIM card from none conveyor. “Lock” is a software setting that keeps the cell phone “locked” to a carrier.

In areas like the US, where carriers offer free or discounted phones with cellular plans, phones are often locked from working with other carriers. The carriers claim this is necessary to cover the cost of the phones, but I don’t think this is the case as you first have to sign a contact to receive a free or discounted cell phone from the carriers.

From the customer’s point of view, carriers that lock phones and use proprietary settings negate many of the benefits of phones that use SIM cards. Ideally, phones should be left unlocked, or at least unlocked after the initial contract expires.

One way to get an unlocked phone without proprietary settings is to buy it new from a third-party carrier in its original unlocked condition. The advantage is that the price is usually close to 60% of the retail price. Some consumers may find it easy to do this because they can upgrade whenever they want. The other advantage is that third-party unlocked phones work just as well with any carrier that uses SIM cards for their service.

Unlocked cell phones are in such high demand that third party companies will unlock your cell phone for a price. This does not mean that the phone will always work normally, as your carrier’s proprietary settings may be retained. There are also instructions on hacking to unlock many phone brands, but a phone that is hacked or unlocked incorrectly can be rendered unusable.

Carriers that use SIM cards and are on GSM networks include:

Cingular Wireless, AT&T Wireless, and T-Mobile.