Can you get Prosecuted for unlocking your iPhone? The answer is that it depends on when you bought your iPhone and of course, what country you live in. In the United States, The Library of Congress, who is the governing body responsible for determining the exceptions to the Digital Millennium Copyright Act (DCMA) reversed its earlier decision by removing the personal cell phone exemption, making it illegal for the first time since 2006.
The DCMA prohibits the circumvention of copyright protection measures. Previously the Library of Congress had determined that because unlocked cell phones were not widely available to the public, it was deemed important enough to allow consumers to circumvent copyright protection in order to do so. However, in its most recent decision the Library of Congress stated that with more companies offering unlocked cell phones, it was no longer necessary for consumers to unlock cell phones themselves. The declaration was made on October 26, 2012 and took effect 90 days later on January 26, 2013. Phones that were purchased before January 26th are a part of a “grandfather” clause and are unaffected by the ruling. Unlocking phone purchased after that date is currently illegal in the United States and doing so can theoretically bring a fine of $2,500 for personal use or $500,000 or jail time for a commercial operation. If someone would actually be persecuted for jail breaking their own cell phone, it seems unlikely as enforcement would be extremely difficult.
The ruling has no effect on jail breaking or rooting devices, which is different than unlocking. Unlocking your phone is accessing the certain system files to allow the phone to work for carriers that it was not designed to work with when it was sold to the consumer. Most phone carriers work off of one of two networks, either GSM (Global System for Mobile Communications) or CDMA (Code Division Mobile Access) and phones are designed in their hardware to work off of one of these two systems. So in theory, any phone that is sold by a carrier that uses the CDMA system, such as Sprint, should work with any other carrier that uses that network, such as Verizon. What prevents this is system files that are typically put on the phone by phone companies before selling them to consumers. Without an unlocked phone your iPhone will only work with the carrier that you bought it from, even after your contract with that company has expired, unlocking allows you to switch your phone to another carrier on the same network. No amount of hacking or unlocking will allow a phone to switch from a CDMA to a GSM network. Recently more and more carriers have been offering unlocking phones, or to unlock the phones once the contract is completed. This was the justification used by the Library of Congress to make unlocking illegal.