s = "Byte string with national characters"
us = u"Unicode string with national characters"

data = unicode(random_byte_string)

print(open("The full text of War and Peace.txt").read())

> type t.py
#encoding: cp1251
s = "абвгд"
us = u"абвгд"
print repr(s), repr(us)
> py -2 t.py
'xe0xe1xe2xe3xe4' u'u0430u0431u0432u0433u0434'

<change encoding declaration in the file to cp866, do not change the contents>
> py -2 t.py
'xe0xe1xe2xe3xe4' u'u0440u0441u0442u0443u0444'

<transcode the file to utf-8, update declaration or replace with BOM>
> py -2 t.py
'xd0xb0xd0xb1xd0xb2xd0xb3xd0xb4' u'u0430u0431u0432u0433u0434'