Unlocked phones vs. locked phones: Why you should care

The US wireless market is more competitive than ever, which is great news for consumers who have lots of choices when it comes choosing a service provider.

But one barrier still exists when trying to switch carriers: the locked smartphone.

The end of wireless contracts marked a watershed trend for consumers because it finally opened the door for them to more easily shop around for alternative wireless carriers. But the software locks that carriers put on phones restricting its use on other networks still prevent many consumers from having total freedom when it comes to choosing a provider.

Now Verizon, the only wireless carrier that sold its phones unlocked out of the box, is reversing course. The company said earlier this week it would begin locking the phones it sells to consumers for an undetermined period of time, which will prevent them from using a SIM card from another carrier. But Verizon promised it would eventually unlock the device after activation. The company hasn't said how long that period would be.

Verizon said it's doing this to deter criminals from stealing phones, which are often stolen en route to retail stores or from the stores themselves. Unlocked phones make attractive targets because they can be resold on the black market or used overseas with different carriers. That's particularly the case for iPhones, which are a top target for thieves because of their high resale value.

Because I get so many questions about the difference between locked versus unlocked phones and what it means to the average wireless customer, I've put together this FAQ for my Ask Maggie readers to summarize the basics.

What's the difference between a locked and unlocked phone?

The difference is that a locked phone has a software code on it that prevents you from using it on another network. An unlocked phone either doesn't have the software lock on it or someone was able to get a code that unlocks the software. Once a device is unlocked, you can pop out the SIM card and put in a different SIM and get service.

What's the benefit of having an unlocked phone?

The biggest benefit of having an unlocked phone is that if you want to switch wireless operators, you can easily do that. All you have to do is pop in a new SIM and sign up for service. There's no need to buy a new phone. This is great because it lets you shop around for the cheapest service instead of being stuck with a particular carrier because you don't want to buy a new phone.

This flexibility can also come in handy for people traveling overseas. It's usually less expensive to use a local wireless service while traveling abroad. And again, you simply pop out the SIM card in your phone and replace it with one from a local carrier. And voila! You will have a new local number and it will be cheaper to make calls in country and access the internet than if you used a US carrier's service that would require roaming on the foreign network.

Does GSM vs CDMA still matter?

Yes, the voice networks of US wireless carriers still use two fundamentally different technologies GSM and CDMA. Sprint and Verizon use CDMA, while AT&T and T-Mobile along with most of the rest of the world use GSM.  

The good news is that phones are a bit more compatible and portable among carriers than they were a few years ago. But phone makers, like Apple, still tend to make multiple versions of their phones so you need to know which model you're buying before you can know if you can take it to another carrier.

For instance, Apple sells two versions of  the iPhone 7, 7 Plus, 8, 8 Plus and X. Unlocked versions of these phones that aren't sold through a carrier are compatible on all four US carriers. The iPhones sold through Verizon or Sprint can also be used on both CDMA and GSM networks, which means they are compatible with AT&T and T-Mobile. But iPhones sold through AT&T and T-Mobile don't include modems for CDMA, so they can't be used for voice service on Verizon or Sprint.

The bottom line is that you should check before you buy if you think there's a chance you'll be switching carriers.

How do I get my phone unlocked?

Depending on how you bought your phone, it may already be unlocked. For example, if you didn't buy your phone through a US carrier or you purchased it directly from Apple or on Amazon and either company indicated it was unlocked, you don't have to do anything.

Prior to the change, Verizon phones came unlocked out of the box.

Phones bought through AT&T, Sprint, T-Mobile, and Verizon (starting later this year) will have locks on them. And you'll need to find out what criteria needs to be satisfied before you can ask for a code to unlock it.

So what are the criteria for unlocking?

It really depends on which carrier you use.

AT&T requires you to pay off your phone and be active on your service for at least 60 days. Even then, the company still requires you wait 14 days to make your request. Sprint also requires that your phone be paid off. And it requires a 50-day wait, though the phone is automatically unlocked. T-Mobile also requires the phone be paid for in full, and it has a 40-day wait period. But it will offer customers traveling abroad a temporarily unlock code.

Verizon wouldn't say how long the locked period will be once the policy change is made in the spring. The company said it will provide an update before the policy takes effect. It also declined to provide a specific timeline for the rollout. The wait period is in place to deter scammers from signing up for service using stolen identities to get a new phone and immediately turning around and selling the device.

Even after the change, Verizon will continue to unlock the phone regardless of whether it's paid off. The company will also still accept unlocked phones from other carriers.

Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.

CNET's Roger Cheng contributed to this report.

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