To "Unlock" an iPhone is to hack it so it can be used with other cell phone carriers than AT&T. The most common carrier to switch to is T-Mobile as it is another GSM carrier. Companies like Verizon and Alltel will not work with the iPhone because they use a different radio signal known as CDMA. In order to unlock the phone, first it must be "Jailbroken". This article will assume the reader's phone isn't jailbroken.
On the computer
Navigate to the "Resource" section of this article and download the program "Blackra1n". This is a program made by a hacker named "George Hotz". Currently, the Blackra1n program is on version 3, and this is the version that will download from the website in the "Resources" section of this article. It is free and there is no charge to use it. After the program download, double click on the "Blackra1n" icon and it will display a button that says "Make it Ra1n". Click on this when your iPhone is connected, and it will jailbreak your phone. (It will usually take less than a minute including the reboot.) When the jailbreak is complete, your phone will display a picture of the hacker (George Hotz) and a few iPhone's dancing around his head. After that picture displays for a few moments, the iPhone will reboot in its jailbroken glory.
On the phone
Look for the icon for "Blackra1n" it will appear, just like an application on your iPhone, and it will look like a single black raindrop. Tap, and open this application to be greeted with four options. You can install "Cydia" (a free jailbroken app store), "Rock" (a smaller lighter version of Cydia, but it costs money), or "sn0w" (the unlock application for the iPhone). There is also an uninstall option to remove the "Blackra1n" icon, but you want to install "Sn0w". Tap on "Sn0w" and then "Install". When the "Snow" application downloads and installs, tap on it and it will automatically begin to unlock the phone. After it finishes, it will respring (reboot) the phone, and your phone will be unlocked.
Choosing T-Mobile
Make a note of other GSM signal cell providers that will support the iPhone. There are smaller, local cell phone companies that will do this, but the largest nationwide provider of GSM under AT&T is T-Mobile. Not only can the iPhone run on T-Mobile, their customer service "unofficially" supports the phone. Their customer service won't help with jailbreaking, or unlocking the phone, but once those things are done, they are dedicated to assisting you in any way possible. To run the iPhone on a T-Mobile network, you will need to purchase their unlimited internet package (as of December 2009 it is 24.99) and wait for the sim card to arrive. When it arrives, insert it into the iPhone and tap "Settings", "General", and "Network". Once on that screen, click on "Cellular Data Network" and enter "internet2.voicestream.com" into the box labeled "APN". This will get the internet working on the iPhone. Voice calls will work with just the sim card.
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