A team of phone hackers is set to launch the first ever software-based unlock application for the iPhone 3G on New Year's Eve.

The Dev Team's YellowSn0w, is a one-touch iPhone app that allows you to use a SIM card from another carrier and have your phone up and running in a matter of minutes. YellowSn0w is a first because it allows you to unlock the iPhone without any tech-heavy tinkering on the physical device or with the software itself.

Dev team member MuscleNerd announced via Twitter that he would demo the new app on the live video streaming service Qik. In the video, MuscleNerd switches his iPhone 3G from the AT&T network to T-mobile in a matter of minutes. As you can see, YellowSn0w is very raw at the moment, but according to MuscleNerd the team is packaging the app into a user-friendly interface.

YelloSn0w capitalises on a software weakness in the iPhone's baseband radio - the radio is how a cellular phone communicates with the network - to unlock the iPhone from AT&T's network. In the video, Musclenerd notes that his SIM card has a notch in it, but says that YellowSn0w users will not have to do this. The notch simply allowed the Dev Team to easily experiment and find weaknesses with the iPhone 3G's SIM lock. The SIM lock is how AT&T is able to stop users from switching to another carrier with the iPhone 3G by making the phone unable to recognise another carrier's SIM card.

To use YellowSn0w you need a jailbroken iPhone with baseband firmware 2.11.07 or earlier. If you used the Dev Team's previous jailbreaking program QuickPwn, you may be out of luck with YellowSn0w. According to the Dev Team, that program altered your baseband firmware making it impossible to use the software unlock next week.

Responding to a question via Twitter, MuscleNerd says that the name YellowSn0W is a bear-themed play on official names for Apple's firmware such as Vail, BigBear, LittleBear, SugarBowl, and Timberline.