what is a unlocked cell phone

An unlocked cell phone is a phone that works with any carrier.

Most cell phones use a Subscriber Identification Module – or SIM – that stores the user’s data (phone number, etc.), and will ONLY work with that carrier’s phone. You've seen these little things a million times - they're about the size of a fingernail, and they resemble tiny little circuit boards. When you buy a phone and service from a carrier, they'll do all sorts of things to the card - then pop the back off the phone, plug the SIM in and away you go. But make sure you LOVE your phone and carrier - because the SIM won't work on another carrier's network.

In other words, if you purchase an ATT contract, your SIM won't work in another phone supported by a different carrier (Verizon, T-Mobile, etc.). Therefore, your information or phone is “locked” – the SIM works with only one carrier. (This is one way cell phone companies force you to stick with them, and also how they recoup losses on "free" phones.)

An unlocked phone is a phone that, either through software or hardware modifications, will work with ANY SIM, regardless of carrier. So, if you purchase an unlocked iPhone, you can (most likely) move the SIM from your Verizon phone to your iPhone, bringing your phone number, etc. with you. But remember: although an unlocked phone allows you to move from one carrier to the next, some features exclusive to the carrier may not “come across” to the new carrier/phone.