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My friend purchased an iPhone 4 that cannot be unlocked so the store sold him a new cell phone service called H2O Wireless. You simply pop in the sim card and it works without needing any unlock or chip. Does anybody have a clue on how it works?

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SIM locks often bind a phone to a mobile provider, so as long as it's the same company, you can switch cards. I'm guessing that's what happened here. – Pekka 웃 Mar 18 '12 at 16:31

H₂O doesn't provide a network of its own. Instead, it purchases bandwidth in bulk from a carrier, in this case AT&T, and provides prepaid service using the carriers network.

So your friends phone isn't unlocked, but works just fine on the carrier network that its locked to.

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Great, thanks for letting me know. If they're using the same towers at AT&T and provide a lower price and no contract, it seems like a killer deal. – Jim Marcus Mar 18 '12 at 17:02

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