As you all know, Cingular (AT&T) are now locked into an exclusive contract with Apple to distribute the iPhone. If many of you were wondering “why Cingular?” you were not alone.
Apparently, Verizon (a much more logical choice) was initially offered the deal but they turned it down because they were unable to reach a deal that satisfied both companies.
“We said no.” Said Jim Gerace, a VZW VP. “We have nothing bad to say about the Apple iPhone. We just couldn’t reach a deal that was mutually beneficial.“
According to USA Today, Apple wanted a percentage of monthly service fees, control over distribution (available in Cingular and Apple Stores only), and even some control over service and support for iPhone customers. Gerace noted – “That would have put our own distribution partners at a disadvantage” and “They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support.”
Whether Cingular was offered the same deal, or whether Apple modified it remains unclear. However, people with direct knowledge of the deal believe that it is a five-year contract that is exclusive to the USA only. Apple will be free to market the iPhone globally.