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Marguerite Reardon explains the intricacies of unlocked phones on C/Net today. It’s a confusing issue, especially here in the States where the 3G CDMA networks of Verizon and Sprint co-exist with the 3G networks of AT&T and T-Mobile.

Many of the smartphones being built today for Verizon and Sprint also include GSM capability on top of CDMA and LTE. If a device also supports GSM, then it has a SIM card, which can be swapped out to access almost any GSM network.

Remember that in the U.S., Verizon and Sprint customers use either a Verizon or Sprint CDMA network. The GSM radio is included in these phones so that subscribers can roam onto networks in Europe and other parts of the world. Verizon and Sprint subscribers can choose either to sign up for international roaming plans with their U.S. carrier when they travel, or, if they can get their devices unlocked, they can swap out the SIM, put in a SIM card from a local provider, and get new service that way.

One thing to note here in terms of software phone locks is that all Verizon 4G LTE smartphones come unlocked out of the box. The reason why is that the spectrum Verizon is using to build its 4G LTE network had restrictions put on it by the Federal Communications Commission, which required the company to allow “open access” to the network. So as part of this provision, Verizon has decided not to lock those devices. That said, its 3G devices are locked.

So what does this mean for the average consumer? Let’s take the iPhone 5 as an example. It’s a 4G LTE device. A Verizon version of this phone comes unlocked out of the box. There aren’t special codes that need to be entered in order to use it on another carrier’s network. But because of the spectrum differences I mentioned above, a Verizon iPhone 5 won’t operate on AT&T’s LTE network. It will operate on AT&T’s 3G network, which is based on GSM. So this means you can use the Verizon iPhone on AT&T, but you won’t get the fastest Internet speeds on it.

And even though the phone is unlocked and uses the same CDMA technology and some of the same radio frequency channels as Sprint, an unlocked iPhone 5 won’t operate on Sprint.

Compatibility and interoperability between different LTE networks, at least in the 800 MHz, PCS, AWS and 2.6 GHz bands, may improve with more flexible handset chips from Qualcomm and others.

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