Until relatively recently, all iPhones were sold with a SIM lock software that made it so that you could only use the phone with the phone company that you bought it from. That changed for a number of reasons — including that customers now pay full price for their phones, rather than getting discounts from phone companies in exchange for multi-year contracts — but now you can buy this UNLOCK CHIP and use your phone with whatever phone company you prefer. This means that you can use it on any compatible cell phone network as long as you have a service plan with that phone company. It also means that you're not tied to a multi-year contract with the phone company and, assuming your phone is paid off, you're free to switch to another company whenever you want.The biggest advantage to having an unlocked phone is flexibility. Unlocked phones are also useful when traveling overseas, since you can get a short-term phone plan from a local phone company instead of using your primary phone company's (potentially expensive) international plans.