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Verizon rejected Apple's iPhone terms

updated 01:35 am EST, Mon January 29, 2007

iPhone rejected by Verizon

Apple's "rich financial terms" and other demands were the primary reasons that Verizon Wireless, the No. 2 cellphone carrier in the US, passed on the chance to be the exclusive distributor of the iPhone almost two years ago. The USA Today on Monday reported that Apple wanted a percentage of the monthly cellphone fees as well as a say over how and where iPhones could be sold. The Cupertino-based company, who eventually announced an exclusive agreement with Cingular, demanded control of the relationship with iPhone customers, according to Jim Gerace, a Verizon Wireless vice president. "We said no. We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial." According to the report, collapse in the talks with Verizon led directly to Apple's deal with Cingular, which is reportedly a five-year exclusive agreement for US distribution.

Apple CEO Steve Jobs insisted that he have hard control over iPhone distribution as well as sole discretion on warranty and replacement issues. The discretion may have put other Verizon distribution partners such as Wal-Mart and Best Buy at a disadvantage, Verizon's exec claimed. "That would have put our own distribution partners at a disadvantage" to Apple and Verizon stores, Gerace said.

Responding to the customer support portion of the report, Cingular reiterated that it would take responsibility for any wireless support. Mark Siegel, a Cingular spokesman said Cingular would field calls related to the wireless service. "I don't want to leave the impression that these (iPhone) customers are not ours. They are."

 
Previous Comments

Yep sounds like apple

01/29, 02:09am reply

If only the cancer became terminal

devilla101

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Joined: Dec 2003

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Wow

01/29, 04:09am reply

That's not a very nice thing to say... you're an a**.

sixcolors

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devilla101

01/29, 05:05am reply

Sounds like you're too much of an idiot to afford anything but moronic comments.

jarod

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Sucks to be verizon...

01/29, 07:27am reply

Cell companies are convinced that they have to send a squadron of pixies out to carry every message, and erect a new towe for every phone. Or at least their fees seem to indicate. Build-out is over. Start charging what the service is worth, or someone else will punch thru this nonsense and take your lunch money. I'm surprised the vp gave his name - it'll be interesting to see where he is if the iPhone takes off...

jpellino

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Really a bad call

01/29, 08:16am reply

on Verizon's part. I am a current VerizonWireless customer who, when the contract ends in Novermber, will not be renewing their service. Their loss. Too bad because they really have been an easy company to deal with, though I hate they lock out certain features of the Treo 650 I own and that there are no rollover minutes.

mgpalma

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5 year exclusive

01/29, 08:52am reply

I thought Cingular was on a 2 year exclusive agreement, not five. Any one have facts on this? I don't totally trust MacNN's reporting accuracy.

lemuel777

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Thank God!

01/29, 08:58am reply

The *real* dealbreaker was that Verizon wanted Apple to disable the really useful features so Verizon could then sell them back to their suckers, I mean, customers. :-)

People grouse about Cingular, but at least Cingular doesn't cripple their phones.

phillymjs

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apple and sprint?

01/29, 09:12am reply

is there any chance that the iPhone could come to sprint some day?

edguzman

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CDMA vs GSM

01/29, 09:40am reply

I really don't see how Apple could have gone with Verizon - Verizon doesn't do GSM, right? Without GSM, the iPhone couldn't be a "world phone" and compete in all markets, just in the US, right? I guess Apple could have made a CDMA + GSM phone, if they wanted to, but with an "exclusive" deal, this would have been really hard to pull off...

Ashari

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5 year for Cingular

01/29, 10:05am reply

The 5-year agreement for Cingular means no other carrier in the US will be able to sell it until this expires. This has been reported elsewhere (outside of MacNN/Electronista universe), although always with the reservation that it's unofficial (neither Apple nor Cingular want to disclose the terms).

You'll be signing a 2-year contract with Cingular when you buy this phone at $500 (or $600 for the 8-GB model).

As for Verizon, since it is big and popular, it is no surprise that Apple wanted to work with them. Neither is it a surprise that Verizon didn't want to work with Apple; instead, they just wanted Apple to do whatever Verizon wanted. There are manufacturers (Nokia/Samsung/LG/Moto/Sony-Ericsson/Palm/etc.) that will painstakingly design a handset, then cripple it at the whim of a carrier, just to get to play in the market. Apple will never be one of them. Unfortunately, these other makers have made carriers so used to the level of control over hardware they now have that it took Cingular (dare I say their vision?) to sign such an exclusive deal (on Apple's terms, no less) without ever seeing even a prototype. While I was never a major fan of Cingular, I really hope they get rewarded here by extra 10 million subscribers by the year's end.

vasic

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