A group of developers claims to have broken the iPhone's Sim lock, allowing users to equip the phone with a Sim card that allows them to operate the device on GSM networks other than AT&T's.

Currently, iPhone users are limited to using one of three service plans with AT&T, which has an exclusive contract with Apple to provide service for the device.

According to the iphonesimfree.com website, the unlock process is accomplished as a simple software install. It does not require users to open the case and solder additional components into the phone.

While operating, the iPhone's Sim card is buried deep within the device. However, uses can eject the chip card by inserting a paper clip into the top of the case.

Installing any software on the iPhone requires a 'jailbreak' procedure, a term commonly used to describe ways to break free from the iPhone's software restrictions.

The somewhat complex process uses a terminal interface to run software which allows users to install and execute applications on the iPhone.

Suggesting that the software will be sold under a commercial licence, the group currently accepts inquiries into bulk orders. The group also projected that it will offer the software to individuals later this week.

IPhonesimfree did not return a request for comment from vnunet.com.

Technology blog Engadget reported that the service is legitimate and not a hoax. The site offers a video of an unlocked iPhone using a T-Mobile Sim card.

Engadget reported that the iphonesimfree software is not affected by the latest firmware updates from Apple and allows access to every iPhone service except for AT&T's visual voicemail interface.

Apple did not return a request for comment. The company has used previous iPhone software updates to disable unlocking software.

The Digital Millennium Copyright Act prohibits the circumventing software's access controls.

In November 2006, the US Copyright Office declared that unlocking mobile phones for lawful use is not considered a violation of law.

But this may not clear hackers who unlock the iPhone, according to Fred Von Lohmann, staff attorney with the Electronic Frontier Foundation.

"The biggest misconception out there is that the exemption would protect the people [distributing the software], and that is wrong," Lohmann told vnunet.com.

While the provision protects the act of unlocking the phone, the distribution of tools and code is not afforded the same exemption.

If Apple can prove that the distribution of the software does circumvent its copyrighted protections, a DMCA claim could be filed.

"Apple has to have done its homework right and the hackers have to be circumventing something, but I'm sure Apple will be interested in asserting a claim about this," said Lohmann.