The iPhone Dev Team said it will release the unlocking procedure on New Year's Eve. The unlock software is code-named "yellowsn0w," and it requires users to have a jailbroken iPhone 3G with a baseband of 2.11.07 or earlier.
The U.S. iPhone 3G is tied to AT&T's wireless service, but once it's unlocked, customers will be able to use their handsets with T-Mobile's voice service. The procedure may have limited appeal, though, because users will only have 3G connectivity with AT&T's services since the carriers use different 3G technology.
The unlock procedure may have more appeal abroad, where GSM is pervasive and 3G services are more standardized. Apple is expanding into multiple markets, but there are still many large countries that cannot officially purchase an iPhone 3G.
The first iPhone was a playground for hackers and tinkerers because many sought to run native applications on the handset. Much of the incentive to jailbreak iPhones was lost once Apple rolled out the App Store earlier this year.
But there's still a small community that chooses to use software like Pwnage Tool 2.0 to jailbreak their iPhone 3Gs. It removes Apple's software controls that prohibit users from installing independent software like the video-sharing Qik. Additionally, the jailbreak can enable Apple-approved apps to run side by side with ones that aren't available through the App Store.
This is the first software solution that has appeared to unlock Apple's handset, but physical hacks have already popped up. A developer group from Brazil was able to make calls with any GSM carrier by modifying the SIM card so the International Mobile Subscriber Identity could be overwritten.
Unlocking the iPhone 3G does carry some risks, though, as it voids the warranty and Apple could potentially disable the device with a software update. Many first-generation iPhone users with unlocked or jailbroken phones found their devices unusable, or "bricked," when Apple rolled out a firmware update last year.