What does "unlocked" mean?

[gramsau1]

I am selling my iPhone 4 and I was guessing that an unlocked phone means it is contract free? I am going to pay the early termination fee to get out from it...is that what unlocked means?

Also, it is Jailbroken- I never really used the features of this function and I don't know what it means except that you can get free apps via Cydia. My provider was ATT....so if I pay the early term fee, can the person who buys it sign up with any other iPhone service provide such as Verizon?

 

[Rugaby]

Unlocked means the phone has been released by the carrier it was designated for and can be used on any carrier.

 

[Napoleon PhoneApart]

Moved to iPhone Unlock.

 

[gramsau1]

That is what I thought. I was confused because Apple's website that the phone's they sell that are unlocked can not be used by Verizon or Sprint - their site says "The unlocked iPhone will not work with CDMA carriers such as Verizon Wireless or Sprint."

Does that mean it requires an additional chip to work with any carrier?