Unlocked Phones: How and Why to Do It

Most cell phones that users buy are tied, or 'locked' to a single carrier's network. Carriers do this because they don't want consumers to take their business elsewhere and we put up with it because the carriers are usually subsidizing the cost of the phone. But it doesn't have to be this way. You can also buy an 'unlocked' phone that will run on any carrier that supports the network architecture used by the phone, although as a practical matter, such phones have to use GSM. The benefits of using such a phone are considerable. In this special report, BYTE contributing editors Chris Spera, Max Cherney and Serdar Yegulalp explain why consumers might want an unlocked phone, how to go about getting one and activating it and why it doesn't work with all phones on all networks. They also provide background on why phones are unlocked, and the legal implications of unlocking them yourself.

Carrier locked, or just "locked" phones are commonplace in the U.S. Most everyone we know has a phone that's been locked for some length of contract term by either a national or large regional carrier. It's really just the way we're used to buying into the cellular market — consumers pay a subsidy in order to be able to pay a little for a high-end phone. The tradeoff is they lock themselves into a long-term wireless communications contract for a minimum of one year.

iPhone in the USA: Locked, subsidized and affordable

In Europe, it's a different story. Many high-end phones are sold without a subsidy and at prices higher than in the US. Popular cell phones are not cheap at full list price: an unlocked iPhone 5 runs from $649 (16GB) to $849 (64GB) In the UK the iPhone 5 starts at €529 which works out to $687 at the exchange rate as we write this.

iPhone in the UK: Unlocked and dear

Consumers pay a lot now — usually $400 or more over the lower, subsidized price — but can take their phone to the compatible carrier of their choice, shopping around for a wireless communication plan that meets their needs and budget. The differences between the two approaches can be summed up as follows:

It's Now Illegal to Remove a Cellular Carrier Lock

Put simply, a carrier locked cell phone contains software that prevents its use on any unintended cellular network. According to provisions in the Digital Millennium Copyright Act, phones purchased as of Jan. 27, 2013 may not be unlocked without the expressed permission of either the hardware manufacturer or the cellular network it is currently locked to, or both. Doing so without permission is now considered illegal.

Under the DMCA, the Librarian of Congress has the discretion to grant exemptions to portions of the act. Prior to Jan. 27 such exemptions were granted, but they have expired and he has no plans to grant a new one.

The outrage over this change led to a petition on the White House website to end the ban. The White House expressed sympathy with the petition and R. David Edelman, senior advisor for Internet, Innovation, & Privacy, said they would pursue changes, but in the meantime unlocking without permission remains illegal. Performing an unauthorized device unlock is currently punishable by up to five years in prison and a $500,000 USD fine.

But many carriers allow, even assist with unlocking your phone once your contract is up.

Next: You buy and use an unlocked phone...

Consumers can Purchase an Unlocked Phone

In many cases, consumers can purchase unlocked phones outright. You can purchase them from a number of different sources, including importers. And many do. This opens up a LOT of options related to carriers and pay-as-you-go-plans. For example, you can get on a plan without purchasing a phone, but carriers don't always make it easy, nor do they like to do this.

iPhone in the USA: Unlocked and costs an arm and a leg

The one thing you have to remember when working with a new unlocked phone — i.e. one you're purchasing for use right now — is you're not (necessarily) going to pay for the device over the life of your contract but your up front costs will be higher. However, you will likely save money over the usable life of the device.

T-Mobile sells many unlocked phones, some inexpensive

How to Activate Your Unlocked Phone

There's a big problem with moving a phone between networks, especially in the U.S.: Different carriers use different network technologies and frequencies. You can't move a CDMA phone (from Verizon, for instance) to a GSM network (like T-Mobile's). Even LTE networks aren't directly interchangeable. As a general matter, unlocked phones work best with GSM phones on GSM networks. In such cases it's a fairly simple matter of swapping SIM cards. LTE networks also use SIM cards, but the networks use different bands and frequency ranges.

Apple unlocked iPhone won't work on CDMA, so don't think you'll take it to Verizon. Apple's site is somewhat cryptic about LTE support; on the one hand, it says it "only works on supported GSM networks," on the other hand it points you to a list of carriers that support iPhones on LTE. The intimation is that it can be programmed to work on different LTE networks, but we haven't tried this and don't know if it can be done.

Be that as it may, all four major carriers have slightly different, and in some cases complex policies regarding unlocked phones. Overall GSM networks tended to be more willing to work with customers with unlocked phones — probably because SIM cards make changing carriers relatively straightforward. Because CDMA technology makes phones less reliable when brought to another carrier, CDMA network providers are willing to work with unlocked phones, but cautioned us that there may be problems. We talked with the four big carriers in the U.S. about their specific policies.

A spokesperson at GSM-based AT&T said in an email to BYTE that the carrier allows unlocking a smartphone under the following circumstances: "...if a customer's account is in good standing, and that the device can't be associated with a "current and active term commitment." The spokesperson went on to clarify, "[the customer] needs to have fulfilled their contract term, upgraded under one of our upgrade policies or paid an early termination fee. The statement also said AT&T is "happy" to sell a SIM card to a customer with an unlocked GSM phone.

An email sent from AT&T as part of the official unlocking process.

Interestingly enough, CDMA-based Verizon doesn't lock its phones in the U.S., a spokesperson told BYTE in an email. Internationally, it's another story. Verizon has "specific polices for international unlocking," the spokesperson said, and "is prohibited from locking phones in the 700Mhz spectrum." The issue, according to the company, stems from copyright law and "...isn't something that will change our policies or practices at all — we don't lock our phones domestically..." the spokesperson wrote.

A spokesperson at GSM-based T-Mobile told BYTE in an email that customers should thoroughly understand the company's policy. Although different policies and specific details apply for each type of plan, generally customers who wish to unlock their phones must be in good standing, have paid for their device and have fulfilled any contractual obligations to the company.

T-Mobile has a wide variety of calling plans for unlocked GSM phones. (Click image for a larger version)

With regards to bringing unlocked phones to the T-Mobile network, the company said it welcomes the practice but recommends customers contact their phone's manufacturer to request the unlock code for their device, according to the spokesperson.

Sprint, a CDMA network, locks phones it sells, claiming that the company does so to "... protect many of a device's features and functions against tampering and unauthorized re-programming," a spokesperson said in an email to BYTE. Sprint will provide customers with the device's "Master Subsidy Lock Code," a string of numbers required to unlock a device, once a contract term is complete and so long as the customer is in good standing.

Sprint is reluctantly willing to activate devices that are unlocked and from another network, the company spokesperson said, adding the caveat that while voice may function, other features and services may not.

Next: So what's best for you, locked or unlocked

What's the Best Way to Go, Unlocked or Locked?

The short answer is it depends. The long answer depends on your finances.

Locked phones give you a lower entry point, but you end up paying more for the phone and the data plan in the end, so ultimately, you're paying a larger total cost of ownership. To mitigate the significant cost of buying the phone at full or nearly full price, you can use pay-as-you-go plans with an unlocked phone, and those can be as low as $50 a month for unlimited voice, text and data.

Americans are used to the lower initial cost and have become dependent upon the instant gratification that comes with reduced purchase prices for high-end phones. In contrast, the European Union has mandated that unlocked devices be made available to its citizens, albeit, at full retail price. As a result, many Europeans purchase an unlocked phone, and are usually able to select the mobile communications plan of their choice, both with, but most usually without a set contract term.

Unlock or Buy Unlocked First?

In our opinion, buying an unlocked phone is the best option. It ensures the smallest total cost of ownership over the life of the phone.

Jailbreaking and carrier unlocking anything but an iPhone by yourself is risky. iPhones have well known, tested hacking tools that make it easy to jailbreak the device, which is the first step in the manual unlocking process. The next step, manually removing the carrier lock, is what is now outlawed. It's also very risky if you don't know what you're doing, or if you don't legally request or purchase an unlock code.

You can request an unlock code from the carrier. In general, after your contract is older than 60-90 days, and you can provide documented proof that you're going to travel internationally, carriers may allow you to call them and request an unlock code for the phone. This doesn't exempt you from your contract, or void the ETF should you break the contract, but it will allow you to use the phone on a competing network when you travel.

You can also simply purchase an unlocked phone and then either purchase a pay-as-you-go voice and data plan or a compatible voice and data plan from a major carrier. The device will cost you more, but you're free to buy the rate plan of your choice and that, over time will likely save you the difference in the cost of the device and more. The point is you have the freedom of choice. As long as your rate plan doesn't lock you into a set contract term, you can purchase the service and price point you want at your discretion.

Which phones and carriers are best

Which phone and carrier is best for you is going to depend on which carriers are available and have the best service in your market. We've seen it vary from city to city, state to state, so look around, ask your friends, etc.

Assuming the device in question uses the communication frequencies of the target network, GSM phones are easiest to unlock and move from carrier to carrier thanks to their SIM card slots. "I've bounced a single device between AT&T and T-Mobile here in the states as often as I've needed simply by swapping out SIM cards," notes Contributing Editor Chris Spera.

Click here for a complete list of GSM carriers.

The phones and carriers we don't like

There is also no one answer for this. It will also depend on carrier availability and quality in your intended market. In the U.S., unlocked phones on Verizon and Sprint don't make a lot of sense. Activating devices on their CDMA networks is more complicated and often involves the carrier due to their lack of a SIM card slot. However, should you want to use Verizon as a carrier and plan on doing international traveling and you own an iPhone that runs on their network, you're in luck. Apple and Verizon unlocked the SIM slot in the iPhone 4S and iPhone 5. Verizon's CDMA radio has never been locked in its branded phones.

The SIM card in the Sprint iPhone 4S/5 is locked. Click here for Sprint's guidelines for unlocking.

Click here for a list of regional CDMA carriers in the U.S.