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An unlocked cell phone isn't tied to a specific carrier's network and works with more than one service provider. It's also likely paid off.
You must contact your current carrier to unlock your phone and request a "network unlock." Unfortunately, due to the practices of big wireless companies, this process may be more complex than necessary. Alternatively, you can begin the unlocking process by visiting their website or one of their retail stores.
Typically, mobile phone carriers allow you to unlock your fully paid-off phone within a year. However, if you're still paying for your device, your carrier will keep it locked. Once you have paid off your phone, you can contact your provider to request an unlock.