The iPhone 3G could soon be jailbroken, by the team which released the popular Pwnage Tool which is used to unlock the vanilla iPhone.
The iPhone Dev Team have been able to break into the baseband processor, which will give the team access to the core of the system.
The team have released a video on their blog showing a custom app running on the iPhone 3G baseband.
Jailbreaking will allow the iPhone to be used on unapproved carrier networks, and to run custom applications.
In other iPhone news, the controversial old iPhone SDK agreement has been posted to the website wikileaks.
Apple last week discontinued the agreement after a series of complaints.
Under the agreement, developers were effectively forbidden from discussing their coding work from anyone other than project team members.
The developers were also restricted from talking about the restrictions - the agreement forbade developers from issuing press releases or making public statements about the agreement.
In protest, blog site WordPress posted the source code for its iPhone application online. Apple has thus far not pursued any legal action.