A SIM lock, simlock, network lock or subsidy lock is a capability built into GSM phones by mobile phone manufacturers. Network providers use this capability to restrict the use of these phones to specific countries and network providers. Generally, phones can be locked to accept only SIM cards based on the International Mobile Subscriber Identity, which has elements of:
Additionally, at least Nokia phones can lock group IDs which are used in voice group call service.
In most countries, most mobile phones are shipped with country and/or network provider locks. In addition, these locked phones tend to have firmware installed on them which is specific to the network provider. For example, if you have a Vodafone or Telstra branded phone in Australia, it displays the relevant logo and may only support features provided by that network (e.g. Vodafone Live!). This firmware is installed by the service provider and is separate from the locking mechanism.
Most mobile phones can be unlocked to work with any GSM, such as O2 or Orange (in the UK), but the phone may still display the original branding and may not support features of the new carrier. Most phones can be unbranded by uploading a different firmware version, a procedure recommended for advanced users only.
A handset can be unlocked by entering a special code, or in some cases, over-the-air by the carrier. Usually the unlock process is permanent. One example where it is not is the Apple iPhone, which is officially unlocked (when applicable) every time during its activation step. The code required to remove all SIM locks from a phone is referred to as the master code, network code key, multilock code.
Typically, a locked phone will display a message if a restricted SIM is used, requesting the unlock code. For example, on the Sony Ericsson T610 mobile phone, "Insert correct SIM card" will appear on the phone's display if the wrong SIM is used. Once a valid unlocking code is entered, the phone will display "Network unlocked". In some cases, the phone will simply display a message explaining that it is locked. This is especially the case with handsets provided by AT&T Mobility.
The unlock code is verified by the phone itself, and is either stored in a database or calculated using an obscure mathematical formula by the provider. The algorithms used in earlier Nokia brand phones (based on IMEI and MCC code) have been reverse engineered, stolen or leaked, resulting in many people offering Nokia unlock codes for free or for a fee. Newer Nokia phones have more robust encoding algorithms and permit fewer attempts at unlocking and are not unlockable by these free unlocking programs.
Many other manufacturers have taken a more cautious approach, and embed a random number in the handset's firmware that is only retained by the network on whose behalf the lock was applied. Such phones can often still be unlocked, but need to be connected to special test equipment that will rewrite that part of its firmware where the lock status is kept.
Most phones have security measures built in their software that prevent users from entering the unlock code too many times. After that the phone becomes "hard-locked" and special unlocking equipment has to be used in order to unlock it.
Handset manufacturers have economic incentives both to strengthen SIM lock security (which placates network providers and enables exclusivity deals), but also to weaken it (broadening a handset's appeal to customers who are not interested in the service provider that offers it). Also, making it too difficult to unlock a handset makes it less appealing to network service providers that have a legal obligation to provide unlock codes for every handset they've ever sold.
The main reason to unlock a phone is to be able to use it with a different SIM card. For example, when traveling abroad it's usually cheaper to temporarily use a foreign network, for example with a prepaid subscription. An unlocked phone can't access extra cell phone towers or give free phone service. All it can do is accept other SIMs.
In some cases, a SIM locked handset is sold at a substantially lower price than an unlocked one, because the service provider expects income through its service. A consumer may choose to unlock the phone and continue using their previous provider. Therefore, SIM locks are usually employed on cheaper (pay-as-you-go) handsets, while discounts on more expensive handsets require a subscription that provides guaranteed cash flow.
A practice known as box breaking is common in the UK and some other markets. This involves purchasing (usually) pay as you go handsets from retail stores, unlocking the phones, and then selling them (often abroad) for a higher price than the subsidised retail price. The SIM card that came with the subsidized handset is then either thrown away or sold or used elsewhere. This practice is entirely legal in the UK, and provides a de-facto limit to the extent to which networks are willing to subsidize pay as you go handsets. While the act of "box breaking" may be legal, most "box breaking" businesses are doing illegal things like (1) importing/exporting box-broken phones to other countries (to sell as grey market goods) without paying import duties, (2) defrauding various tax authorities on VAT frauds and (3) substituting counterfeit batteries or chargers.    In recent times network operators have been insisting that new customers purchase substantial amounts of airtime at the same time as they buy a new handset, in order that the total price they pay comes close to the true value of the handset.
Some companies have begun to offer an e-mail unlocking service. This service requires that the individual who wishes to unlock their phone email their IMEI number, which is usually displayed by any terminal upon entering *#06#, to the company. The company will then process this IMEI number and email back an unlock code and instructions. Input the unlock code and the phone is unlocked. These email services are usually the most efficient as it is the same method most retail stores will offer. However there are several fake random number generators available, so you must be careful, there are only a few older Nokia handsets that can be done using this method. Newer handsets have random unlock codes which are generated at random with no order, the code is then stored in a database by the network or the manufacturer, thus these handsets can only be unlocked via code provided by the network or professional unlocking equipment physically connected to the handset. Some vendors also offer unlocking by physically mailing the phone to a technician.
The Apple iPhone is unique in that it sets the lock/unlock state during the initial activation step or during an iTunes sync. During either activity, the SIM lock is set or cleared based on information about the IMEI stored in Apple's database.
In 2004, a company BLADOX in the Czech Republic released a small device called a Turbo SIM which contained a small MCU capable of spoofing the network ID during SIM registration. This thin device sits between the SIM card and the phone, in the SIM slot. A small piece of plastic on the SIM is removed to make room for the MCU. The most popular of these devices, originally for the U.S. Apple iPhone 3G, is typically called "Universal Sim" after a label printed on the card. A similar technique is used to "unlock" most Japanese phones as Japanese providers never provide unlock codes for their phones even after the contract is over.
Singapore is the only country that forbids outright SIM locking and contract/phone bundling.
The US and UK do not have any SIM locking laws, but American and British carriers usually offer unlocking codes voluntarily.
Many countries listed below have some form of SIM locking laws specifying the period of SIM locking and the cost of obtaining unlocking codes. The worldwide launch of the iPhone has shattered numerous myths about whether some country has laws against SIM locking.
In Australia, carriers can choose whether to SIM/Network Lock handsets or not and usually tend to only SIM/Network lock prepaid handsets. There does not appear to be any regulation or law on SIM locking in Australia.
One law professor, Dale Clapperton, gave a talk stating that bundling iPhone and cell phone service could be violating the Trade Practices Act. However, no other legal professional or academic has come out in support of this viewpoint. This also doesn't adress SIM locking per se, only as applied to unsubsidized iPhone purchases, and persistence of the lock beyond the contractual period.
Currently there are 2 cases (VTB-VAB NV v. Total Belgium NV and Galatea BVBA v. Sanoma Magazines Belgium NV) before the European Court of Justice that will determine whether the laws in Belgium are forbidden under Directive 2005/29/EC The Unfair Commercial Practices Directive. An Advocate General of the European Court, Verica Trstenjak, whose job is to present an impartial opinion on the matter has concluded that the Belgium laws are contrary to the EU directives. While the European Court of Justice does not have to follow the Advocate General's opinion, they seldom diverged from the opinion of the Advocate General. If successful, Belgium must repeal the anti-bundling law.
Belgian Enterprise Minister Vincent Van Quickenborne is currently undergoing steps to repeal the laws in question, regardless of the European Court of Justice ruling. If successful, Singapore will be the only country in the world that outright forbids SIM locking and contract/phone bundling.
On April 23, 2009, the European Court of Justice has ruled against Belgium and struck down Belgium's anti-bundling law. The Belgium government has until May 2009 to change the law before the European Commission commence proceedings against Belgium.
In Brazil, SIM locks are not prohibited. However, the mobile carrier must inform the consumer of the existence of a SIM lock. Anatel, Brazil's telecom regulator, set the maximum simlocking period to be 12 months and the carrier must provide the unlocking code free of charge after 12 months.
In Canada, there are no laws regulating SIM locking or unlocking. No Canadian wireless service provider sells unlocked phones, and none unlock after service contracts expire. Though you can buy unlock codes from Bell mobility for a cost now. Changes to the Copyright Act proposed by the Canadian government would make any circumvention of digital locks, such as carrier locks on cell phones, illegal. In 2008, then-Industry Minister Jim Prentice introduced Bill C-61 to update the Copyright Act and implement World Intellectual Property Organization (WIPO) treaty provisions. However, the bill expired with the dissolution of parliament for the 2008 federal election. The government still maintains interest in these reforms, as witnessed by the public consultations held during summer 2009 and by its current participation in Anti-Counterfeiting Trade Agreement (ACTA) negotiations.
The carrier can choose to bind the contracts up to 6 months, from the contracts' start. Many of the carriers choose to lock the phones, but they can only do it for 6 months. If the phone needs to be unlocked within the first 6 months, the carrier can charge DKK 500 (~ € 67) for the unlock. After 6 months, the carrier is obligated by law to unlock the phone free of charge. But the consumer needs to contact the original supplier, and provide the IMEI and original phone number for which the phone was sold to.
In Finland, carriers are not allowed to sell SIM locked GSM phones, nor are they allowed to offer tie-in sales on GSM equipment. For the purposes of the Finnish law, a tie-in sale is defined as selling the equipment for a discounted price contingent on the consumer also acquiring a new service contract from the seller. Under the terms of a provisional exception, valid from 2006 until 2009, tie-in sales are permitted with 3G handsets, and 3G equipment which is purchased under such tie-in sales may be SIM locked. The SIM lock must be removed free of charge at the conclusion of the tie-in contract, within a maximum duration of 2 years. As of September 2008, the Finnish government is preparing to extend the exception, and at the same time is considering reducing the duration of tie-in contracts to 1 year.
In France, SIM locks are not prohibited. However, the mobile operator must inform the consumer of the existence of a SIM lock. The subscriber has the right to request that the SIM lock be removed at any time. No later than 6 months prior to the conclusion of the contract, the mobile operator must "systematically and free of charge" provide the subscriber with a procedure to deactivate the SIM lock. Operators may charge a fee for removing the SIM lock prior to the 6-month deadline.
In Germany, there does not appear to be any effective law regulating SIM locking. For example, the iPhone was initially offered for sale in Germany exclusively through T-Mobile, and it was locked to T-Mobile's network. They began to provide unlocking codes for that phone after they were sued by Vodafone and a temporary injunction was issued requiring T-Mobile to do so. Vodafone's injunction was later overturned, and the iPhone is again available exclusively locked to T-Mobile. While T-Mobile Germany told the court that they would unlock the iphone after the contract, they were doing it voluntarily.
In Hong Kong, carriers are not allowed to SIM lock a phone for the purpose of solely tying customers to their network. But Hong Kong carriers can SIM-lock a phone to protect the handset subsidy or to enforce mobile plan contracts or to protect from theft. After the initial purchase subsidy has been recovered, or the full cost of the equipment has been paid up under a rental or installment agreement, the carrier must provide a detailed procedure for unlocking the equipment free of charge upon request.
Italy has SIM locking laws that the carriers must specify the amount of subsidies, and subscribers can obtain unlocking codes after 9 months by paying 1/2 of the listed subsidies. The SIM lock must be removed within 18 months.
Dutch mobile carriers have an agreement with the Netherlands' telecom regulator, Onafhankelijke Post en Telecommunicatie Autoriteit, to establish a code of conduct with respect to SIM locking—specifically unlocking fees can be charged within the first 12 months and SIM lock cannot last longer than 12 months.
In a 2002 letter to the Dutch Secretary of State of Economic Affairs, OPTA stated that the telecom regulator has decided to start working on the formalization of the voluntary code of conduct into legislation. However, in a 2006 report written by the Dutch Ministry of Economic Affairs, it stated that competition in the Dutch mobile market is sufficient and the formalization of the voluntary code of conduct into legislation is not needed. Thus there are no SIM locking laws in the Netherlands.
A 2006 study that was sponsored by the Portugal regulator, ANACOM, on handset subsidies and SIM locking concluded that there are no special regulatory concerns on offering subsidized SIM locked equipment in exchange for signing a contract tying a customer to a particular network. Network providers are allowed to apply SIM locks as they see fit, and they may voluntarily remove them if they choose to do so. In the paper, the author stated that the average unlocking fee charged by Portuguese carriers are in the range of 90-100 euros.
Romanian telecom regulator ANCOM signed a code of conduct with several Romanian carriers that starting September 1, 2009 mobile operators selling handsets locked within their own network have to inform clients whether the handset is locked and provide unlocking upon request. It is a "self-regulation" by the carriers to prevent the regulator to actually impose regulations on them. If the handset is not purchased together with other electronic communications services, the mobile telephony operator that sells it will bear the unlocking costs and will not bind the terminal unlocking by the purchase of other services or by the payment of other fees.
If the handset is purchased as part of a promotional package or at a preferential price and the customer requires the unlocking before the expiry of the minimum period provided in the contract for communications services concluded with the operator, the customer will have to pay both the unlocking fee and the penalty for the anticipated unlocking of the handset. The price charged to unlock handsets will not exceed the costs of this operation and operators are obliged to meet unlocking requests within 15 days.
Singapore's telecommunications regulator has ruled that SIM locking is not allowed in the wordings of licenses given to mobile carriers.
In 1998, the Spanish telecom regulator, Comision del Mercado de las Telecommunicaciones, saw that Spanish mobile carriers already provided unlocking codes voluntarily for fee within the first 12 months and for free after 12 months, so CMT decided not to put any legal framework in Spain. CMT has not revisited this decision since then, therefore there are no SIM locking laws in Spain.
In the United Kingdom, mobile phone network providers don't have to provide unlocking codes at all even after the end of the contract. Most operators offer some form of voluntary unlocking service, depending on the state of the contract and the model of phone, but usually for a charge. The full Oftel 2002 SIM lock position paper specifies that there is no SIM locking law in the UK; the regulator only wants "consumer awareness". The examples within the position paper are just "examples" of current carrier practices for illustration purposes, but do not reflect any official Oftel regulation. The main networks may unlock handsets at their discretion at a cost either at the end of a contract or if it is a prepay handset after several months. Vodafone's new Blackberry offerings (i.e. Storm) is an examples of a UK carrier not offering unlocking codes. O2 changed their policy in 2009 to allow the unlocking of Apple iPhones voluntarily.
In the United States, one of the two national GSM carriers, T-Mobile, will unlock your handset if you have an active account in good standing for at least 90 days. As well, T-Mobile will unlock a phone if you pay full retail price and show proof of purchase through a faxed document. The other, AT&T Wireless, will usually do so once you have concluded your contract, but may also unlock the phone in some other situations as well. Neither carrier is compelled to unlock phones by any law or regulation, and they may choose not to unlock certain phones. For example, AT&T has stated that they will not unlock iPhones under any circumstances, even after customers are out of contract.
In a 2006 submission to the US Library of Congress' Copyright Office with respect to DMCA exemptions, Stanford law professor, Jennifer Granick, specifically stated that the FCC does not prohibit handset locking.
The DMCA formerly was claimed to criminalize unlocking. However, an exemption introduced on November 27, 2006 specifically permits it, and will expire in three years but it can be renewed after that. The exemption only applies to the actual unlocking, not to providing an unlocking device or service, see WIPO Copyright and Performances and Phonograms Treaties Implementation Act.