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What is unlock?

Unlocked is the term used to describe mobile phones that are not tied to a particular service provider in order to be used. So if your iPhone is locked to a specific carrier then you can only use it only with this carrier! 
Unlocked phones can be used on the network of any compatible provider with the insertion of a compatible SIM card. Some phones that are locked can be unlocked using computers or special phone codes, though this can invalidate warranties.
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