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Why do mobile phone companies lock phones?

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Mobile companies say their phones are already heavily subsidised to entice you to buy them, and they need to make up this shortfall. Yet the reality, as ever, comes down to cold hard cash. For the firms, it wouldn't make sense to sell you the phone at reduced cost, and then let you take your cash to another network provider.

However, it's not all doom and gloom and some providers, such as Three, have started selling unlocked phones - both to those on pay-as-you-go and pay-monthly contracts.

  • Why do mobile phone companies lock phones?