As of January 26th, any newly purchased mobile phone can only be unlocked with carrier permission. Older phones can be unlocked freely.
Unlocking is in a legal grey area under the DMCA. The law was supposed to protect creative works, but it's often been misused by electronics makers to block competition and kill markets for used goods. The courts have pushed back, ruling that the DMCA doesn't protect digital locks that keep digital devices from talking to each other when creative work isn't involved. And no creative work is involved here: Wireless carriers aren't worried about "piracy" of the software on their phones, they're worried about people reselling subsidized phones at a profit. So if the matter ever reached a court, it might well decide that the DMCA does not forbid unlocking a phone.
The EFF doesn't expect mass lawsuit against individuals but warns there could be a risk to businesses that unlock and resell phones. If the courts rule in favor of the carrier, penalties can be up to $2,500 per unlocked phone in civil court and $500,000 or five years in prison in criminal court. Whether or not a phone is under contract has no bearing on the matter which basically means we aren't able to freely use the devices we own.
Phones are, of course, the tip of the iceberg of problems the DMCA has created. It kills aftermarkets, interferes with legitimate research, and squelches creativity in new media. The exemptions created by the Copyright Office can be helpful but, as this episode shows, they are too narrow and too brief. They also turn a small, specialized federal office into a sort of Technology Regulation Bureau. It's absurd that this small group of copyright lawyers and librarians is tasked with making decisions about the future of electronics markets.
We strongly urge readers to sign the petition started at WhiteHouse.gov to 'Make Unlocking Cell Phones Legal'.