SIM Lock removal

While initially iPhones were only sold on the AT&T network with a SIM lock in place, various hackers have found methods to "unlock" the phone; more recently some carriers have started to sell unlocked iPhones. More than a quarter of iPhones sold in the United States were not registered with AT&T. Apple speculates that they were likely shipped overseas and unlocked. AT&T has stated that the "iPhone cannot be unlocked, even if you are out of contract".

Unlocked iPhone firmware version 2.0 using GrameenPhone Network in Bangladesh

On November 21, 2007, T-Mobile in Germany announced it would sell the phone unlocked and without a T-Mobile contract, caused by a preliminary injunction against T-Mobile put in place by their competitor, Vodafone. In Germany, a company is not allowed to lock the SIM card to itself. On December 4, 2007, a German court decided to grant T-Mobile exclusive rights to sell the iPhone with SIM lock, overturning the temporary injunction. In addition, T-Mobile will voluntarily offer to unlock customers' iPhone after the termination of the contract.

On carriers where removal of the iPhone's SIM lock is allowed the carrier can submit a request to Apple which will then remove the carrier locking on the next restore of the iPhone through iTunes. Customers of the carriers Optus and Vodafone in Australia have so far been successful in unlocking their phones to work on any network.

Activation

The iPhone normally prevents access to its media player and web features unless it has also been activated as a phone with an authorized carrier. On July 3, 2007, Jon Lech Johansen reported on his blog that he had successfully bypassed this requirement and unlocked the iPhone's other features with a combination of custom software and modification of the iTunes binary. He published the software and offsets for others to use.

Unlike the original, the 3G iPhone must be activated in the store in most countries. This need for in-store activation, as well as the huge number of first-generation iPhone and iPod Touch users upgrading to iPhone OS 2.0, caused a worldwide overload of Apple's servers on July 11, 2008, the day on which both the iPhone 3G and iPhone OS 2.0 updates were released. After the update, devices were required to connect to Apple's servers to authenticate the update, causing many devices to be temporarily unusable.

However, on the O2 network in the United Kingdom, users can buy the phone online and activate it via iTunes, as with the previous model. Likewise, in Australia, iPhones purchased as a pre-paid kit do not require in-store activation, but require activation online at the Optus website and iTunes.

Third party applications

The iPhone's operating system is designed to only run software that has an Apple-approved cryptographic signature. This restriction can be overcome by "jailbreaking" the phone, which involves replacing the iPhone's firmware with a slightly modified version that does not enforce the signature check. Doing so may be a circumvention of Apple's technical protection measures, which in the United States would be legal under special provisions of the Digital Millennium Copyright Act that allows for circumvention for the purpose of connecting a wireless telephone to a wireless telephone communication network.