Many people ask the question: "What is an unlocked cell phone?" In order to answer that, we must first look at how the cell phone industry works. The preceding question will most likely apply to T-Mobile and Cingular/AT&T customers.
Your service provider (T-Mobile or Cingular/AT&T) provides phone service. That is their main business. They do not make cell phones & accessories (headsets, covers, etc.). However, they do sell it. Manufacturers (like Motorola, LG, Samsung, Sony) manufacture cell phones. These manufacturers sell their cell phones to the service providers. We are going to use Motorola's RAZR V3 as an example.
Motorola makes the RAZR V3 (the world most popular cell phone) and sells it to T-Mobile. Since T-Mobile wants to keep their customers, they only buy locked phones. Only T-Mobile SIM cards will work in these T-Mobile locked cell phones. If you try to insert a Cingular/AT&T SIM card into a T-Mobile locked phone, it will not work.
So what happens if you break or lose your cell phone? The Cellular Replacement video describes what to do when you are in need of an unlocked phone. Most people who break or lose their cell phone do NOT want to be tied on another GSM year contract. All they need is the hardware. If you go to T-Mobile, they will try to 'upgrade' your contract. This means your contract will be extended for another two years. They will sell you a T-Mobile 'locked' cell phone at a small discount (big wow).
Since they are salesmen who have to hit quota, they won't tell you to slip your SIM card into an unlocked cell phone. Unlocked Cell phones are not sold in Cell Phone Stores. So for our example once you order an unlocked RAZR V3 , upon arrival slip in your SIM card and you will have phone service within seconds.
An Unlocked Cell Phone will work for both T-Mobile and Cingular/AT&T. This is because both carriers use GSM technology (SIM cards). If you lost your SIM card, walk into your cell phone store and say, "The only thing I need to do is replace my SIM card." Your replacement SIM card is FREE so if they try to charge you, go somewhere else.