The procedure, which the 17-year-old posted on his blog Thursday, raises the possibility of a cottage industry springing up to buy iPhones, unlocking them and then selling them to people who don't want AT&T service or can't get it, particularly overseas.

The phone, which combines an innovative touch-screen interface with the media-playing abilities of the iPod, is currently sold only in the U.S.

An AP reporter was able to verify that an iPhone Hotz brought to the AP's headquarters on Friday was unlocked. Hotz placed the reporter's T-Mobile SIM card, a small chip that identifies a phone to the network, in the iPhone. It then connected to T-Mobile's network and placed calls using the reporter's account.

T-Mobile is the only major U.S. carrier apart from AT&T that is compatible with the iPhone's cellular technology, but smaller carriers also use the technology, known as GSM. In Europe and Asia, GSM is the dominant network technology.

The hack is complicated and requires skill with both soldering and software, and missteps may result in the iPhone becoming useless, so few people will be able to follow the instructions.

"But that's the simplest I could make them," Hotz said.

Technology blog Engadget on Friday reported successfully unlocking an iPhone using a different method that required no tinkering with the hardware. The software was supplied by an anonymous group of hackers that apparently plans to charge for it.

AT&T spokesman Mark Siegel and Apple spokeswoman Jennifer Bowcock said their companies had no comment on Hotz' exploit. Hotz said the companies had not been in touch with him.

Apple shares rose $4.23, or 3.2 percent, to close at $135.30 on Friday. AT&T shares gained 26 cents, or 0.7 percent, to close at $40.36.

The iPhone has already been made to work on overseas networks using another method, which involves copying information from the SIM chip, or Subscriber Identity Module.

The SIM-chip method does not involve any soldering, but does require special equipment, and it doesn't unlock the phone - each new SIM chip has to be reprogrammed for use on a particular iPhone.

Both hacks leave intact the iPhone's many functions, including a built-in camera and the ability to access Wi-Fi networks. The only thing that won't work is the "visual voicemail" feature, which lists voice messages as if they were incoming e-mail.

Since the details of both hacks are public, Apple may be able to modify the iPhone production line to make new phones invulnerable.