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I'm an Android guy, setting up an iPhone for the first time so please be gentle.

I bought an "unlocked" 1st gen iPhone from an eBay seller to set up for a family member. When I insert the SIM I get this:

"The SIM card inserted in this iPhone does not appear to be supported"

Am I correct in believing this message means the device is not unlocked? The vendor tells me he successfully used it with SIMs from two (UK) operators.

Assuming it is locked, if I get it unlocked in a phone shop, what's the downside? Or should I just send it back, and buy one that is actually unlocked? Unfortunately the network it will be used on is not the same as the one the phone appears to be locked to.

I'm leaning towards just getting it unlocked unofficially, as it's too old to get the latest iOS releases anyway, and it just needs to work for SMS and calls.

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How old is the SIM card? I had some problems with very old ones and had them replaced by the network provider. –  patrix Jun 28 '12 at 17:49
    
The SIM is probably fairly old, though not sure to be honest - it is active and working in an Android device, but perhaps iPhone has a specific requirement it doesn't meet. –  Ollie C Jun 28 '12 at 18:34
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