Hackers have just released an updated Ultrasn0w that will allow iPhone 4 and 3GS owners to unlock the device using software based solution. Currently, the tool is still in testing phase, but you can still use the unofficial version by using the steps below.
Before you start with the process you must have your iPhone 4 or 3GS jailbroken on iOS 5.1.1 and have one of the following basebands.
Step 1: Start Cydia and navigate to Manage and then select Sources.
Step 2: Tap over Edit and the repository: http://repo.iparelhos.com into the pop-up window, then tap over the Add Source.
Step 3: Once the repo has been added, check for the source list, which will show the Ultrasn0w Fixer 5.1.1. Tap over the newly installed utility, and select the Install button in top right hand corner of the screen.
Step 4: Once complete, the official Ultrasn0w 1.2.5, needs to be installed. Tap Search in Cydia, type in “Ultrasn0w” and look for the package.
Step 5: After finding it, install it and you will have your iPhone 4 running iOS 5.1.1. unlocked absolutely free.