You may have heard the term "unlocked phone" before, but what exactly does that mean? Why do unlocked phones typically cost more than seemingly similar phones that are locked? What is the advantage to having an unlocked phone in the first place?
Comparing Locked and Unlocked Phones
When you bought your cell phone from the service provider, chances are that they programmed, or locked, your phone's identification number to the SIM card provided by their service. By doing this, they are able to send calls to your phone, compile your minutes, and keep track of your service. In theory, this is a good thing since it gives you the technology to make phone calls, retrieve voicemail, and send text messages.
However, there are severe limitations to locked mobile phones. They are indeed "locked" to one mobile carrier. For example, if you bought a phone from AT&T and wanted to switch service to T-Mobile, you would not be able to take your locked phone with you. It would not work with a T-Mobile SIM card and, thus, you would not be able to use T-Mobile service with that same phone.
Unlocked phones are distinctly different. Instead of being restricted to a single carrier, they can be used with any compatible network with any compatible provider. This is the reason why unlocked cell phones are typically more expensive than locked phones, not to mention that locked phones are usually the only way that you can get a reduced price on a handset with a contract. An iPhone on contract may be $199, but an unlocked iPhone on its own may be $600 or more.
If you have a factory unlocked phone, all you have to do to switch between service providers is to switch the SIM card inside the phone.
Unlocking a Locked Phone
Phones that are sold to in "locked" form, can usually be unlocked using an unlock code, specialized software, or as a service from a cell phone professional.
As of January 26, 2013, unlocking cell phones became illegal for U.S. consumers under the Digital Millennium Copyright Act. According to ARSTechnica.com, the restriction against unlocking phones applies only to phones purchased on or after this date.
Once a phone is unlocked, the main advantage is the ability to use the same phone with different carriers. This is useful domestically, but it becomes even more useful with international travel. Using your cell phone worldwide is a lot more cost-effective if you are able to simply purchase a pre-paid SIM card at the country of your destination. There is no need for expensive roaming charges or to buy a new phone altogether; all you need is the new SIM if your phone is not locked.
While the advantages to having an unlocked phone are apparent, the cost of purchasing this type of phone can be prohibitive. If you plan to change carriers frequently or spend quite a bit of time traveling the globe, the expense may be a worthwhile one. The decision is ultimately up to you.