Sim-lock, SP-lock, “coding” - all these words have similar meaning: a programmed limit in the phone to work with a single network. A sim lock allows a network provider to prevent handsets from being used on other GSM networks. Usually those handsets are sold with a discount, and the provider covers the price difference. The handset stays inside the same network and within a year pays back the expenses of the service provider.
SIM-LOCK could be installed by the manufacturing or distributing company. The network provider orders some quantity of handsets from manufacturer. The producing company supplies the phones along with the SIM-LOCK removing codes. The physical sense of Sim-lock: there is a unique MCC/NCC code of the country and network saved in the SIM-Card. Phone detects those codes when it's powered on. If they have coincided, the telephone works normally, other ways on display appears the following massage: “Invalid SIM” or “Enter the SIM-Lock code”. There are some other methods of coding the handsets, but the considered above – is the most widespread.