iPhone was released by Apple, Inc. it had an exclusive two-year agreement with AT&T, Inc. to provide phone and data services in the U.S. This exclusivity was guaranteed by AT&T’s locking the iPhone to only be compatible with SIM cards from AT&T.
The U.S. is the only mobile phone market that locks SIM cards to mobile devices so that they are locked to particular carrier SIM, thus the consumer can not take their phone to another carrier and use it.
A hackers group known as iPhoneSIMfree.com has reportedly discovered a way to unlock Apple's iPhone so that it can be used on other GSM compatible networks using another providers SIM card.
The hacker group said that it was relatively simple to unlock the iPhone, according to a blog known as Engadget.com. Unlike most other mobile phones available in the U.S. the iPhone uses GSM technology, which is only offered in the U.S. by AT&T and T-Mobile.
Read more here