What Does Locked & Unlocked Mean on Cell Phones?by Jason Artman ; Updated September 28, 2017
You may commonly see the terms "locked" and "unlocked" when shopping for a mobile phone on online marketplaces. A higher price typically accompanies an unlocked phone, but that does not necessarily mean that unlocked phones are better. Unlocking a phone requires technical skill and knowledge, and spending a little extra money on an unlocked phone may be worthwhile if there is some possibility that you might switch phone carriers.
A phone that is locked is programmed to work only with a specific mobile phone carrier. Without unlocking the phone, it is not possible to use it with another carrier. Unlocking a phone requires changing its internal programming. This allows the phone to work with other carriers. Some people with specialized technical knowledge buy mobile phones, unlock them and resell them online at a profit. Sometimes a mobile phone carrier will also unlock a phone for a customer who is terminating her account.
Why Phones Are Locked
Mobile phones are expensive devices to produce, and the most powerful phones are worth hundreds of dollars. However, consumers are rarely willing to spend several hundred dollars on a new phone. To entice potential customers, carriers subsidize part of the cost of a new phone to make it inexpensive or free to the consumer. In return, the consumer signs a contract pledging to remain a customer for a certain number of years. Over those years, the carrier recoups the expense of the subsidy. Carriers typically charge fees to customers who terminate their contracts early. Locking a phone provides an additional incentive for the customer to stay with the carrier.
Benefits of Unlocking a Phone
Suppose that you own a phone that you enjoy, and your current carrier is the only one who sells that phone. If you prefer the service or price structure of another carrier -- and your phone is locked -- you face the choice of remaining with a carrier or using a phone that you do not prefer. Purchasing an unlocked phone gives you the freedom to choose your phone and your carrier. In addition, unlocking a phone may allow you to run software on the phone that you would not otherwise be able to. This is the case with Apple's iPhone; in its locked state, the iPhone can only run applications downloaded from the iTunes Store. Unlocking or "jailbreaking" the phone allows third-party applications to be installed.
Limitations of Unlocking a Phone
Two primary technologies are used in mobile phone networks: GSM and CDMA. The two network types are not compatible, and most phones do not have the hardware needed to work on both. In the United States, AT&T and T-Mobile are GSM carriers, while Sprint and Verizon are CDMA carriers. If you unlock an AT&T phone, for example, it works on the T-Mobile network but may not work on the Sprint network. Before spending the extra money to purchase an unlocked phone, make sure that it has the required hardware to work on your desired network.