This is mainly a question for UK iPhone users, as things may work a bit differently in other countries. In July of '10 I purchased my iPhone 4 at my local Apple Store. As far as I understand Apple sells the iPhone unlocked (sim-free) in the UK so if you buy it outright you can stick whatever sim you want in it, or if you want to go on contract you can make your choice of the 4-5 carriers that offer iPhone service in the UK. I would think they would have to sell it unlocked or they would have to have different stock for each carrier and for those who just want the phone sim-free. Anyway, I got it on an O2 contract and just assumed it was unlocked although I guess I never actually stuck another sim card in to test it. I got the 4S in November so I decided to give my 4 to my daughter for Christmas. She is on Orange so we ordered a micro-sim from them and registered it to her phone number. But the sim wouldn't work. It would alternate between saying 'Invalid SIM' and 'No Service'. After a few days of searching online and getting more and more frustrated, I read a post on some forum that made me wonder if the phone wasn't actually unlocked. So I sent an unlock request to O2. 2 days later I got the text saying that the phone was unlocked, so I inserted the new sim and plugged the phone into iTunes and lo and behold, it worked. I'm happy it's working now, but I'm left wondering how it could be that the phone was locked to O2. Did the phone become locked to that carrier when I first inserted the sim? If so, what do the people do who purchase the phone outright? If anyone has any insight on this, please enlighten me. It's just to satisfy my own curiosity at this point, the phone is working fine.