The term unlock code is used by phone manufacturers to refer to the 8 or 16 digit unlock code that is necessary to remove the operator lock (also known as subsidy lock) from mobile phones. This code is randomly assigned to each mobile phone on request of the cell phone operators and prevents use of the cell phone on a cell phone network other than that to which the phone was originally locked.

The term "subsidy" refers to the subsidization of cell phones sold to customers that purchase mobile phones as part of a contract with the mobile service operator. Many network operators provide these subsidies as an incentive for users to sign extended contracts, and use the subsidy lock as a means of protecting their investment. The installation of such locks means that users often are forced to purchase a different phone if they decide to switch their network (of advantage to both the manufacturer and Wireless service provider).

Unlocking is removing service provider's lock code to make the phone available to other networks. Unlocking your phone allows you to use your phone with any network it is compatible with and allows you the option of using alternative service providers worldwide.

A SIM lock, simlock, network lock or subsidy lock not to be confused with PIN or PUK code
is a capability built-in to GSM phones by mobile phone manufacturers. Network providers use this capability to restrict the use of these phones to specific countries and network providers. Currently, phones can be locked to accept only SIM cards from one or more of the following:
Countries (the phone will work in one country, but not another)
Network/Service providers (e.g. AT&T Mobility, T-Mobile, Vodafone, etc.)
SIM types (i.e. only specific SIM cards can be used with the phone).
In some countries, most mobile phones are shipped with country and/or network provider locks.
A network lock only allows the use of the phone with SIM cards that belong to a specific network.
The most common lock is the service provider lock (SP-lock). Many different service providers may use the same physical network (e.g. MVNOs). An SP-lock ensures that the handset is only used with SIM cards for the same service provider that marketed the handset.
Service providers sometimes substantially subsidize handsets, and locking the handset improves the odds that its use will economically benefit the service provider.

SIM cards are small smart cards that fit inside phones based on the GSM technology. SIMs contain personalized information about its user including the network activation and even phone book entries. One can put its SIM card in another GSM phone and use it as if it was his own phone.

Service offered by most cellular service providers, allowing users to use their phone even if they are not in their home coverage area. In general, using a phone while &roaming& incurs additional fees, though some service providers offer national roaming for free on some service plans. When a phone is in a &roaming area&, it usually displays an indicator light or logo such as &R& or &ROAM&. An increasing number of phones offer what is called International or Global Roaming, since it allows users to make and receive phone calls from virtually any country.

Although there are several types of "locks" that can apply to a phone, the most talked-about type is a carrier lock, also known as a SIM lock or subsidy lock.
Many phones sold by carriers come "locked" to that carrier. A "locked" phone can only be used with that carrier; it cannot be used with another carrier's service. (Not counting roaming.)

Unlocked means the phone is not locked to any network. The phone can accept any sim card (except Video Networks). Usually phones come locked so they can only work on one network. For example if you have a phone locked to T-mobile but you want to insert a Vodafone sim card, this is not possible as the phone is "locked" to T-mobile but once it is unlocked it will then accept the Vodafone sim card.