It's the world's most-hyped mobile phone, but Apple's iPhone could be yours without the rigmarole of changing network providers and being tied into a long contract.

What started as complicated instructions to unlock the device on technical Web sites has now gone mainstream.

Any consumer can now buy the iPhone unlocked from East Asian retailers and auction Web sites for little more than $500, about $100 more than Apple and AT&T charge.

On Friday 700 unlocked iPhones were selling on the British version of eBay at about $600 each, but without the mandatory lock-in service contracts.

[A Google search of online retailers revealed a dozen retailers offering unlocked iPhones to U.S. customers, with prices ranging from $500 to $700. It's legal to unlock a phone in the U.S., at least for the time being.]

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Such is its alarm that Apple has now threatened to sue retailers in Singapore who are unlocking the phones and selling them over the Internet. Shopkeepers said they had received letters from Apple threatening to sue for $700 for every unlocked iPhone they had sold.

The iPhone has been hailed as the future of mobile phones, winning Time magazine's coveted Invention of the Year award. It is operated using a touch screen and as well as having all the functions of a normal mobile phone, it incorporates an iPod and the capacity to browse the Internet.

Phone networks fought hard to win the right to sell the iPhone, with AT&T, Britain's O2, Germany's T-Mobile and France's Orange entering into exclusivity deals with Apple.

O2 has so far refused to reveal how many handsets it has sold since the iPhone's British launch on Nov. 10, saying only that sales have been "in line with expectations." Two-thirds of buyers are new customers stolen from other networks.

A spokesman for O2 cautioned that anyone buying a locked phone ran the risk of finding it rendered inoperable by new software updates.

"We don't really understand why anyone would want to buy an unlocked phone," he said. "If you're spending that amount of money on the phone and then unlocking it you run the risk of turning it into a useless brick.

"Every update that Apple releases reverts the phone to a locked state," he added. "We're scratching our heads as to why people would want to run the risk of losing all that money."

Apple's exclusivity deals have already suffered challenges in two European countries. Orange, the provider that won the French exclusivity deal, has been forced to sell unlocked handsets in order to comply with French consumer law.

The firm sold 30,000 iPhones in the first five days of sales in France, but despite the network selling the unlocked phone for $1,100, $500 more than the two-year contract option, 20 per cent of purchasers opted for the unlocked version.

T-Mobile, who won the exclusivity rights in Germany, were forced to sell the iPhone unlocked after rival Vodafone obtained a court order. But on Tuesday the company managed to reverse the decision in a higher court.