Wireless phone customers may soon be able to switch carriers while keeping their same wireless mobile devices. Though it is currently illegal for a consumer to unlock a cellphone without the carrier’s permission (thereby allowing it to be used on other wireless networks), just two weeks ago the five largest wireless carriers all agreed to allow consumers to unlock phones once the consumer’s contract with that carrier has expired.
Mobile phones may be purchased either “locked” or “unlocked.” A locked device contains a subscriber identification module (SIM) lock that only allows a specific type of SIM card to be used. Thus, a locked phone purchased from Verizon Wireless will only work with a Verizon SIM card; SIM cards from other carriers will not work with the phone. An unlocked phone gives the consumer several advantages, including the most flexibility in choice of wireless carrier and the possibility of avoiding overseas roaming charges. So why do consumers still buy locked phones? The answer is simple—price. Locked phones are subsidized by the carrier. In return for the subsidized price, the consumer must enter into a service contract with that carrier. So in choosing between a locked or unlocked phone, the consumer must weigh the price of the phone against the benefits of an unlocked phone.


