When you purchase a modem either on pay-as-you-go or a contract, network carrier includes a SIM, a chip in your handset, containing a serial number that identifies you to the network provider.
Most network carrier “lock” their modem so it works only with their specific SIM card, a chip in your modem, containing a serial number that identifies you to the network provider.
The only reason to lock the SIM is to ensure you use their service for an extended period of time. If you attempt to use an alternative SIM card in a locked modem, you will receive error messages, such as “SIM Card Not Accepted or Invalid SIM or SIM Locked”
As we know mostly mobile broadband service provider are providing USB modem with only their network unlocked SIM so we cannot able to use any other SIM on that device so by some process we get freedom to use any GSM or CDMA SIM on its called unlocking. By unlocking modem we remove barrier from the carrier and got freedom to use any SIM. Hence, unlocking enables you to cut all ties to your initial mobile network provider without replacing your modem.