A locked phone is the practice done by the major wireless network operators that keeps a cell phone locked to the carrier of choice. For example, if you purchase an iPhone from AT&T, it comes with software preloaded to prevent it from working on another carrier. This is done due to the fact that a user is typical subsidized when signing a new contract, so going back to our example, a user signing a new contract with AT&T would only need to pay $199 for the iPhone as opposed to the full price of $649. The carrier then makes its money back through the length of the contract which is usually for two years. It’s during this two year contract that the carrier doesn’t want the subscriber switching to another carrier, which is why it gets locked.
Just yesterday, the White House and FCC have come out in favor of making changes to current laws that make it illegal for subscribers to unlock their phone. The goal is to make it legal one again for users to unlock their phones.
The practice was legal until January 26th due to the Library of Congress making an exemption in the Digital Millennium Copyright Act. Then for some reason, the Library of Congress changed the exemption in October 2012 which then make it illegal for a subscriber to unlock their cell phone. The practice of unlocking a cellphone will still be illegal until Congress, the FCC, and the White House figure get around to changing the current law.
To learn what this ruling could mean for businesses, check out this fantastic article from Information Week.