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A lot of people ask if it's legal to unlock your cell phone, and the simple answer is - Yes! You can unlock your cell phone.
Firstly, it's your phone. And secondly, when you buy it, it is in fact in an unlocked state. That's the default state in which most GSM phones come in.
And, as far as the carrier (service provider) is concerned, if you're already on a calling plan and locked into a 1-2 year contract, the provider is already assured that your basic monthly commitment is going to reach them anyway. So, at least from a financial viewpoint, they shouldn't have an issue whether or not you stay on their service with the SIM card allotted to you by them -- or use another GSM provider's SIM card on the same phone.
One way to know if your phone is unlocked is to simply insert any active SIM card (other than the one you already have) and see if it works. In a majority of cases, this should work just fine. But if the phone displays an error message, then it is locked.
A direct way to unlock such a phone is simply to key in a secret code -- a number unique to that phone, derived from its serial number (or IMEI number). Nokia phones are the most receptive to this kind of unlocking. For most other phones, the alternative is to rewrite the firmware (operating system) to remove the offending lock.
Note that unlocking cannot be done with your CDMA / IDEN phones. That is, if you're on Verizon or Nextel, your service provider's system is linked directly to your phone and not the SIM card. But with providers like T-Mobile and Cingular (that use the GSM technology), the provider's system is linked to your SIM card -- the phone itself never comes into the picture.
So, unless there was some clause during your purchase that said 'This phone is the property of XYZ service provider and can't be modified or altered in any way', the phone is technically (and legally) yours. You're free to do whatever you want to do with it -- which, in this case, relates to using different SIM cards with the same phone.
And while it's not clear if the service provider can deliberately lock down your phone to keep you to your existing plan, it's better to keep your unlock codes handy, just to be safe and in charge of your choice.
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