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One blogger, George Hotz, on Friday posted a step-by-step method for unlocking the iPhone that involves both hardware and software modifications. His blog also includes photos of an iPhone he said is unlocked and shows T-Mobile USA Inc. as the service provider. At another site, iPhoneSimFree.com, a company claims it can unlock iPhones through software only. A screen image with an item about the company on Engadget.com also shows an iPhone displaying the T-Mobile name.

In addition, John McLaughlin, founder of Uniquephones, said his Belfast, U.K., company will be posting software on Saturday that iPhone users can download to unlock their handsets to work with any SIM (Subscriber Identity Module) card on any network they choose. The software should hit the Web at www.iphoneunlocking.com between noon and 2 p.m. Eastern Time, he said.

The iPhone is based on GSM (Global System for Mobile Communication), the most widely used cellular technology, but today the hot phone is sold only in the U.S. and locked into AT&T Inc.’s network. Unlocking would allow iPhone owners to break the required two-year contract with AT&T and choose their own GSM carriers. More importantly, it would allow people outside the U.S. to own and use the highly prized device. With an unlocked GSM phone, it’s possible to change carriers by putting in a different SIM card.

Uniquephones’ McLaughlin said 450,000 users already had signed up at iphoneunlocking.com, which the company set up soon after the iPhone was released for people interested in having their iPhones unlocked. The Web site was not active at the time this story was written, but should be reactivated Saturday with options for users to access the unlocking software, he said.

McLaughlin plans to charge between US$25 and $50 for the software, but users who had already signed up will have access to the code at either a 25 percent or 50 percent discount. Uniquephones will let people anywhere in the world download the software. The company already unlocks phones from many manufacturers, including Nokia Corp. and Motorola Inc.

There were about eight locks that Uniquephones engineers had to break in the iPhone software to come up with the code that will unlock the phones, and engineers in several countries had been working around the clock since the phone’s release to do so. McLaughlin declined to go into great detail but said one of the most difficult locks to break was contained in the handset’s electrically erasable programmable read-only memory (EEPROM). There also was a lock in the handset’s permanent phone memory (PPM) as well as other places in the iPhone’s software. In the end, it was an engineer in Russia who came up with the software for unlocking the phone, McLaughlin said.

McLaughlin claims he is using his iPhone on the Vodafone Group PLC network in the U.K. He added that both Vodafone’s network and T-Mobile U.K. Ltd. network allow iPhone users to download data faster on their iPhones than AT&T Wireless’s network does.

Although almost 100 percent of the iPhone’s features work even when the handset is unlocked and using another carrier’s SIM card, the Visual Voicemail feature will only work on AT&T’s network because of the way the feature is designed, McLaughlin said. Visual Voicemail lets users easily view the messages that have been left for them.

The iPhone has been a hot target for unlocking since its June 29 launch, both because of its advanced design and features and because AT&T has an unusual long-term exclusive relationship with Apple. It’s common for U.S. mobile operators to lock the phones they sell, but in some cases they will later unlock the phones free or for a small fee.

On its site, iPhoneSimFree.com says it will start selling individual per-unit licenses for its unlocking software starting next week. The company will also accept inquiries for bulk purchases of 500 or more licenses.

Hotz, who wrote that he is soon heading off to college, isn’t offering to sell his technique but is auctioning in ebay what he claims is the world’s second unlocked iPhone.

Stephen Lawson is senior U.S. correspondent for the IDG News Service.

Elizabeth Montalbano is a senior writer for the IDG News Service.

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