No, there is nothing illegal about locking a phone. They lock it because they subsidize the purchase price. So they want you to use their service. I personally think it is bad business for them not to unlock it, but it isn't illegal. Your phone works fine - but only on their network. It's like telling DirecTV that you don't want to use their service - make your DirecTV dish work with, well, Dish Network. Not going to happen, is it?

http://www.bongowireless.com

The only game in town.