New iOS prevents users from unlocking their iPhones
In its latest iOS version 4.2.1, Apple has introduced a new mechanism to further complicate the removal of the SIM lock, also known as a network or subsidy lock. The operating system will check which baseband version (in simple terms, "modem firmware") is installed on the iOS device and refuse to start if an unauthorised version is found. With the earlier versions of iOS the TinyUmbrella tool can be used to persuade locked devices to co-operate; this tool won't work in iOS 4.2.1.
Currently, users that buy an iPhone 4 in, for example, the United Kingdom, Germany, France or Italy can purchase an unlocked device, often at a much higher price, that can be used with a SIM (in the iPhone 4's case, a micro-SIM) from any mobile GSM carrier. This is particularly useful, for instance, when roaming abroad as it allows users to purchase more economical, pre-paid SIMS, from local providers. Most iPhones bought on contract with a carrier are provided at a steep discount, known as a subsidy, and are locked to that carrier. In the UK and Germany, users can often have their phones unlocked after their contract is up, sometimes for a fee. However, there may be no official unlock option for iPhones purchased in other countries. In such cases software developed by the jailbreaking community can be used to remove the SIM lock on jailbroken devices (for instance ultrasn0w).
Now with iOS 4.2.1 it is only possible to temporarily unlock (jailbrake) a device to install arbitrary software not authorised by Apple. However, to operate the freely installed software the device needs to be unlocked after every reboot via a tethered jailbreak with such tools as redsn0w. A method of unlocking the SIM only makes sense once the jailbreak can be permanently injected into the device, usually by exploiting a second vulnerability. At the moment, with the SIM lock anchored in the baseband, there is no way to remove the SIM lock in devices running the latest iOS 4.2.1.
Various older baseband versions did allow users to unlock their devices, and tools such as PwnageTool were previously used to prevent a baseband update when installing iOS updates, effectively allowing users to unlock their iPhones by running a current iOS with an older baseband version. Apple has now made this impossible with the baseband check mechanism that not even TinyUmbrella has been able to crack. This is one of the reasons why no update for the PwnageTool suitable for updating to iOS 4.2.1 has become available. Whether the jailbreakers will find a way to bypass the hurdle remains to be seen. Those who require an unlocked iPhone can either purchase an officially unlocked version at a price, or for the time being, not update to iOS 4.2.1.