It is the phone itself. SIM cards are peculiar to GSM phones. There are other types that do not use a SIM card. The SIM card carries information that is specific to the subscriber. All phones have operating software. Some of the software is common to all phones, regardless of who the carrier is. Some portions of the programming are reserved for the carrier. An example of this would be the banner the user sees when the phone is powering up, but there is a lot of programming that is transparent to the user, which is protected by the lock.
For a cell phone to be unlocked, it means that the phone is able to use any SIM card from any phone network type. For example, a locked Verizon Wireless phone would be unable to accept and function with an AT&T SIM card, whilst an unlocked Verizon Wireless phone would be able to accept and function with an AT&T SIM card.
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