Last updated 06-APR-11.
Yes. Almost certainly.
As was explained above, unlocking is not illegal in the sense it doesn't belong in the domain of criminal law. There is no law in the UK which says that you can't unlock your phone. However, unlocking and boxbreaking do come under civil law. Welcome to the world of contracts and agreements, which the courts have an interest in arbitrating and settling.
What this means is that while the police won't come after you for unlocking a phone, you may be breaching a contract or service agreement by tampering with your phone, especially if you haven't yet fully paid it off. As an example, Three's Terms and Conditions state:
"During the term of your Agreement for the supply of 3 Services, you must not permit your Handset to be unlocked via any unauthorised manner (ie. by anyone other than us or the Handset manufacturer). You must contact us if you want your Handset to be unlocked from our network."
When you buy a phone through Three and using their services, you are agreeing to this condition they impose on their services. Interesting to note is the fact that they don't explain what the consequence of you unlocking your phone in an A?unauthorised mannerA?. Will they stop providing you with a service? Will they take your phone away? They don't say and we don't know. Equally, we've never heard of anyone being taken to court for unlocking their phone. What we do know is that mobile operators have been known to refuse to fix phones that have been unlocked (though this is not always the case as they want to keep your custom after all).
In other sections we explore whether unlocking is legal