by 
The Curious Bag
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Most cell phone service providers prevent consumers from using the cell phone provided to them with another carrier by locking it. However, people can "unlock" their phone, usually by changing a few settings.
Legality
Unlocking a cell phone or purchasing an unlocked one does not violate any laws. As a matter of fact, some countries, such as Belgium, declare it illegal for a cell phone provider to lock a phone.
Benefits
Unlocking a cell phone gives people a wider range of phones to use with their service provider--especially helpful if a person wants a phone not offered by their provider. In addition, it can help avoid penalties for making calls when traveling outside of the country by letting the consumer switch to a temporary local provider.
Function
The process for unlocking a cell phone varies from carrier to carrier and by cell phone type. Some may need a simple code entered into the phone while others require special equipment.
Considerations
To unlock a cell phone, a person must subscribe to a carrier that uses Global System for Mobile Communications (GSM), a cellular network standard used to encrypt cell phone signals. As of 2007, only AT&T and T-Mobile used GSM on their networks.
Tips
Nokia-brand cell phones are some of the easiest to unlock. CNet offers a free download that generates unlocking codes for cell phones manufactured by Nokia. For this software, people also need to get their IMEI number by dialing *#06#.
Source:
TheTravelInsider.com: Unlock Your Cell Phone
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