Sprint will unlock cell phones

Sprint Nextel announced today that they’ll provide customers with the necessary codes to unlock their cell phones if a proposed settlement for a California class action lawsuit goes ahead.

Any phone you buy directly from a U.S. carrier will come "locked" to that provider. My AT&T locked phone will only work with AT&T and not T-Mobile. Unlocked phones don’t have the settings tying them to a specific carrier. Locked phones dominate the U.S. market but lately consumers are getting testy about the restrictions.

Unlocking cell phones is hot news since Apple’s decision not to let customers modify their iPhones so that they can work on other networks besides AT&T. Two separate lawsuits were filed recently against AT&T and Apple Inc., saying the companies’ restrictions amount to unfair business practices.

Apple estimates that 250,000 iPhones were sold to people who had the intention of unlocking the handsets so that they could be used with wireless providers other than AT&T. Those unlocks were made by hackers who cracked Apple's stopgap measures to enable use outside AT&T under subsequent iPhone firmware revisions.

The suit filed against Sprint last year alleged that phone locking is anticompetitive. Because a locked phone can’t be used to make calls once a customer leaves a carrier, you can’t take your favorite phone to a new carrier unless it is unlocked. Since unlocking requires a code, U.S. customers are forced to buy a new phone when they sign up for new service plan.

Sprint's momentous decision could start a major shift in the U.S. market, especially if other carriers follow suit. it could cause a huge shift in how cell phones are used here. It’s mostly good news for consumers, but because Sprint uses CDMA technology, only phones that use CDMA will work on the Sprint networks. Verizon, Alltel and US Cellular all use CDMA. Conversely, the Sprint CDMA phones won’t work on AT&T or or T-Mobile, who still use the old GSM technology.

The Sprint move won’t do much good till other carriers agree to play ball. Even if another carrier uses CDMA, the carrier would have to agree to activate the phone for you because CDMA phones don’t use SIM cards. It will be interested to see what happens and who the winners and losers will be.