Verizon passed on exclusive 5-year iPhone deal

[AppleInsider]

Verizon Wireless passed on the chance to be the exclusive distributor of the iPhone almost two years ago, balking at Apple's rich financial terms and other demands, according to a published report.

The USA Today on Monday cited Jim Gerace, a Verizon Wireless vice president, as saying the iPod maker and No. 2 U.S. wireless carrier just could not come to terms on a variety of issues.

Among them, Apple reportedly wanted a percentage of the monthly cellphone fees, a say over how and where iPhones could be sold, and control of the relationship with iPhone customers.

"We said no. We have nothing bad to say about the Apple iPhone," Gerace told the paper. "We just couldn't reach a deal that was mutually beneficial."

A mandate by Apple chief executive Steve Jobs that he have 'hard control' over the iPhone distribution may have meant leaving out Wal-Mart, Best Buy and other Verizon distributors. "That would have put our own distribution partners at a disadvantage" to Apple and Verizon stores, Gerace said.

Yet another point of contention was customer care, according to the USA Today, which said Apple wanted sole discretion over whether to replace or repair faulty phones.

"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," Gerace added.

While Cingular, the carrier which ultimately inked the iPhone deal, won't discuss the financial terms or say how long its exclusivity lasts, the USA Today cited two people with direct knowledge of the deal as saying "it's a five-year contract."

The exclusive is USA-only, leaving Apple free to market its iPhone globally, the paper said.

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[Sälli]

Yet another point of contention was customer care, according to the USA Today, which said Apple wanted sole discretion over whether to replace or repair faulty phones.

"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," Gerace added.

It has been really interesting to read about the upcoming iPhone and how it is changing the whole industry in the United States. I live in Finland, and I have to say that you have the whole thing screwed up over there.

Phone manufacturers are phone manufacturers and they should be responsible for the phones, which includes the installed software, repairing the devices and so on. Its their hardware and they know what to do with it. Also, phone manufacturers should be the ones selling the phones.

The operator is a network operator and should take care of the network. Period. They should sell network contracts, not phones. (Well, I guess they can do the latter as well, but you probably get my point.)

As all the other phone companies haven't had the guts to say it out loud, it is definitely a good thing that Apple is now entering the business and you will finally gets things at least a bit sorted out.

[Porchland]

Wow. I just assumed the Cingular deal was one or two years. Five?

That sounds to me like a bad deal for Apple, since it will be (theoretically) foreclosed from about three-fourths of the mobile subscribers in the United States. Anyone can change carriers, I suppose, but I don't see the iPhone getting the kind of penetration in the U.S. market after five years that it would get all the carriers were selling it after two.

[AgNuke1707]

Originally Posted by Porchland

Wow. I just assumed the Cingular deal was one or two years. Five?

That sounds to me like a bad deal for Apple, since it will be (theoretically) foreclosed from about three-fourths of the mobile subscribers in the United States. Anyone can change carriers, I suppose, but I don't see the iPhone getting the kind of penetration in the U.S. market after five years that it would get all the carriers were selling it after two.

I thought the Cingular deal WAS a two-year deal. Also, if Apple couldn't come to terms with Verizon, then it makes you wonder if there ever will be a CDMA version of the phone. All lot of people griped because Apple went with Cingular, but hey ... at least they tried. We'll see how good or bad Verizon's decision was over the next couple of years.

[Maestro64]

This is what I was saying along, no way you will see a CDMA iphone since Verizon would never give up control. The people who run Verizon have given up the Ma-Bell mentality. Look at what Verizon has done or tried to do, they are trying to put back what AT&T once was. Control every aspect of telecom, it is the only way they know how to compete.

Verizon is taking Cell phone where land lines were 30 yrs ago, where the phone company decided what services you can have, when you can have them and what your phone looked like, and you will rent the phone since they own the phone. I remember when Verizon (Or Bell Atlantic) would tell people if they did not uses the rented rotorary phone they would not guarrantee the service.

I hope to this does in fact change how cell phone business works in the future, think about companies like Motorola and others would begin developing phones that people want not what Verizon want you to have.

[Johnny Mozzarella]

As I keep thing about what Apple's long-term strategy is I can't help but feel that the deal with Cingular is really just buying Apple time until it can roll out the service it really wants.

Remember during the keynote Steve said Apple and Google aren't going to merge but each is going to do what they do best in a very tight relationship. In five years Google could have a nationwide WiMax network and Apple could have a compatible iPhone. The real revolution would be that unlike traditional telcos Apple and Google would most likely charge a flat fee for data transmission, irrespective of if it is voice or something else.

Can't wait for 2012!

[Johnny Mozzarella]

Originally Posted by AgNuke1707

I thought the Cingular deal WAS a two-year deal. Also, if Apple couldn't come to terms with Verizon, then it makes you wonder if there ever will be a CDMA version of the phone. All lot of people griped because Apple went with Cingular, but hey ... at least they tried. We'll see how good or bad Verizon's decision was over the next couple of years.

Wouldn't Apple be making a CDMA version of the iPhone for Japan. You could always try to get one of those.

[Robin Hood]

Originally Posted by Johnny Mozzarella

Wouldn't Apple be making a CDMA version of the iPhone for Japan. You could always try to get one of those.

Japan has two W-CDMA networks and one CDMA network, as far as I know.

Also, because Verizon does not use sim cards, I don't see it working without their blessing. That being said, if you're with T-Mobile USA, you should be able to import an unlocked European iPhone and pop in your T-Mobile USA sim.

[AgNuke1707]

Originally Posted by Johnny Mozzarella

Wouldn't Apple be making a CDMA version of the iPhone for Japan. You could always try to get one of those.

I could ... but I'm with Cingular I switched from Verizon about 18 months ago because most of the people I called all the time were Cingular customers and I was tired of it eating up my minutes wih Verizon. They were also costing me a ton of money. It was a good network, but not what I wanted.

I think someone nailed it though. The iPhone as it stands is probably filler until Apple gets what they want in a service. Apple wants to control their product like they always have and this will be an interesting relationship to watch. We'll see just how much Cingular lets Steve & Co. do independently. I'm sure we'll see 3G roll out by the end of the year, installable Widgets / Apps, etc. We didn't start out with an iPod that could play video, but we got there in a little less than 5 years. Other people did it first, but Apple did it in a way that made it appeal to WAYYYY more people. As every good Mac user knows, it may take Apple a frustratingly long time to do something, but you can bet when it rolls out it'll be damned eay to use (a la iPod and OS X) and look very sexy... (the late iMac G4)

[domerdel]

The 2 year they were throwing around earlier had to do with consumer contract based on the two prices of iPhone, not Cingular and Apple.

[ChevalierMalFet]

Well, as bad as Cingular is, Verizon is in fact far worse, so kudos to Apple for being too picky for Verizon.

[Robin Hood]

From what I understand, Verizon are the worst for disabling features. I'm actually a Verizon customer in a way, as I'm with Vodafone here in Ireland, and Verizon Wireless is 45% owned by Vodafone.

[Saiko]

Originally Posted by ChevalierMalFet

Well, as bad as Cingular is, Verizon is in fact far worse.

This is totally based on location. It may be where you live that Verizon is infact inferior to Cingular, but where I live, Verizon's network is far more reliable than Cingular's. There's far worse coverage for Cingular than Verizon here. While I am currently hating verizon for a lot of their practices & prices, they have the best coverage around here (In the midwest), and I've yet to find a place I can go to get a crappy / nonexistant signal on my phone.

But in the grand scheme of things, Cingular has better coverage in states majorily existing on the east and west coast of the United States. This is where Apple see's a greater market for distribution. Its just sad that people like me get f***** because of it.

[BlackSummerNight]

I don't see anything wrong with Verizon wanting more control. You say Verizon want to control every aspect, well seems like Apple is doing the same thing when it comes to this iPhone.

Originally Posted by Maestro64

This is what I was saying along, no way you will see a CDMA iphone since Verizon would never give up control. The people who run Verizon have given up the Ma-Bell mentality. Look at what Verizon has done or tried to do, they are trying to put back what AT&T once was. Control every aspect of telecom, it is the only way they know how to compete.

Verizon is taking Cell phone where land lines were 30 yrs ago, where the phone company decided what services you can have, when you can have them and what your phone looked like, and you will rent the phone since they own the phone. I remember when Verizon (Or Bell Atlantic) would tell people if they did not uses the rented rotorary phone they would not guarrantee the service.

I hope to this does in fact change how cell phone business works in the future, think about companies like Motorola and others would begin developing phones that people want not what Verizon want you to have.

[ChevalierMalFet]

Apologies, I should have been more succinct. Regardless of network quality, While I find Cingular distasteful to do business with, I'd not do business with Verizon without first buying a jar of vaseline.

Hope that clears it up.

[jimhill]

Originally Posted by ChevalierMalFet

Well, as bad as Cingular is, Verizon is in fact far worse, so kudos to Apple for being too picky for Verizon.

Amen. I ate the $175 early termination fee a couple of months ago to get away from Verizon. I got a great deal from them on a Razr and then the thing showed up so crippled it was of use only as a phone. Literally every single additional feature that Motorola built into the hardware was disabled unless an additional fee was paid.

Same phone from Cingular: Bluetooth syncing with my Mac, big ol' iTunes database, drag-n-drop file exchanges, easy transferral of pictures and videos to my Mac for emailing (why fritter away cell minutes on that?) and the monthly phone fee is comparable.

I'd switch again every day of the week and twice on Sundays. My only lament -- not the money, that was well-spent -- is that for all the press coverage last year about "number portability", that apparently means "number portability if both carriers agree and Verizon doesn't agree with Cingular in northern New Mexico. No, you can't keep that number. Not yours."

[Timon]

My bet is that the 5 years started when they released the first iTune Moto phone which will have been near 3 years when they ship the iPhone in June. If I'm correct then we have to wait about 3 years from then before iPhones could show up on other networks.

I'm on Verizon and did not renewing my contract but will run month to month for now. I'll wait until I see the 3G phone then maybe I'll switch. I really don't want to be stuck with EDGE since we have 3G in my area.

Originally Posted by Porchland

Wow. I just assumed the Cingular deal was one or two years. Five?

That sounds to me like a bad deal for Apple, since it will be (theoretically) foreclosed from about three-fourths of the mobile subscribers in the United States. Anyone can change carriers, I suppose, but I don't see the iPhone getting the kind of penetration in the U.S. market after five years that it would get all the carriers were selling it after two.

[donebylee]

Originally Posted by Robin Hood

From what I understand, Verizon are the worst for disabling features. I'm actually a Verizon customer in a way, as I'm with Vodafone here in Ireland, and Verizon Wireless is 45% owned by Vodafone.

Thank god that Verizon didn't get their money-grubbing hands on the iPhone...they would have hobbled every bit of software on it to force you to use their crappy apps.

I am a Verizon customer with a Motorola RAZR and they have so hobbled the phone that even Motorola's own software for syncing with my address book, calendar etc... is completely worthless. And you can't even transfer a pic from your own computer to your phone without paying Verizon a fee for it, despite the fact that you can plug the phone into your computer.

Verizon has a great network and a lousy nickle and dime attitude when it comes to their customers.

When my contract is up I'm gone.

[Johnny Mozzarella]

Originally Posted by Saiko

This is totally based on location. It may be where you live that Verizon is infact inferior to Cingular, but where I live, Verizon's network is far more reliable than Cingular's. There's far worse coverage for Cingular than Verizon here. While I am currently hating verizon for a lot of their practices & prices, they have the best coverage around here (In the midwest), and I've yet to find a place I can go to get a crappy / nonexistant signal on my phone.

But in the grand scheme of things, Cingular has better coverage in states majorily existing on the east and west coast of the United States. This is where Apple see's a greater market for distribution. Its just sad that people like me get f***** because of it.

We were not talking about coverage but on Verizon's heavy handed tactics to disable features and force users to use only Verizon phones and services. My wife has a high-end Samsung phone that can sync with the Mac OS Address Book but Verizon blocks that feature.

[Johnny Mozzarella]

Originally Posted by BlackSummerNight

I don't see anything wrong with Verizon wanting more control. You say Verizon want to control every aspect, well seems like Apple is doing the same thing when it comes to this iPhone.

Woah! Big difference.

Verizon blocks features and forces you to spend more money by locking you into their services.
Apple put WiFi into the iPhone so you aren't locked into only using the carrier's expensive data plan.

Verizon disables bluetooth so you can't sync with your Address Book or send pictures directly to your computer.
Apple exerts tight control over the phone so you have a seemless experience syncing YOUR addresses, photos, music and photos.

I could go on...

[Johnny Mozzarella]

Originally Posted by Timon

My bet is that the 5 years started when they released the first iTune Moto phone which will have been near 3 years when they ship the iPhone in June. If I'm correct then we have to wait about 3 years from then before iPhones could show up on other networks.

+5 Insightful
I think you may be correct about that.

[BlackSummerNight]

Apple didn't put wifi in there so you won't be locked into using the carrier's data plan, they put wifi there because they are about to sell a $600 phone, and wifi was pretty much a must.

Why do you feel that Apple has to have tight control for users to have seemless experience with their computer. The core of the phone, i agree, Apple should have tight control, but as far as them needing to have the type of control that they are trying to have over the iPhone, there is no need.

Originally Posted by Johnny Mozzarella

Woah! Big difference.

Verizon blocks features and forces you to spend more money by locking you into their services.
Apple put WiFi into the iPhone so you aren't locked into only using the carrier's expensive data plan.

Verizon disables bluetooth so you can't sync with your Address Book or send pictures directly to your computer.
Apple exerts tight control over the phone so you have a seemless experience syncing YOUR addresses, photos, music and photos.

I could go on...

[SpamSandwich]

But will you be able to use a Skype Widget on iPhone?... hmmm

[Johnny Mozzarella]

Originally Posted by BlackSummerNight

Apple didn't put wifi in there so you won't be locked into using the carrier's data plan, they put wifi there because they are about to sell a $600 phone, and wifi was pretty much a must.

Is that why Verizon doesn't offer a single smartphone with WiFi built-in at any price level?
Apple didn't have to include WiFi, but they did because Apple wants to build compelling devices that will appeal to consumers.
Verizon wants to sell you a phone that will nickel and dime you to death and increase their bottom line.

Originally Posted by BlackSummerNight

Why do you feel that Apple has to have tight control for users to have seemless experience with their computer. The core of the phone, i agree, Apple should have tight control, but as far as them needing to have the type of control that they are trying to have over the iPhone, there is no need.

Does any company have to have tight control over the hardware/software it makes? NO.
Unfortunately, we HAVE TO choose between a phone controlled by Apple, Cingular or Verizon.
I'll go with Apple any day.

[Johnny Mozzarella]

Originally Posted by SpamSandwich

But will you be able to use a Skype Widget on iPhone?... hmmm

No.
I'm sure some hackers will get Linux running but I doubt we will see Skype.
Also keep in mind that Skype is a black box technology and can't be implemented without first reverse engineering Skype's protocols.

[Louzer]

Originally Posted by Johnny Mozzarella

Woah! Big difference.

Verizon blocks features and forces you to spend more money by locking you into their services.
Apple put WiFi into the iPhone so you aren't locked into only using the carrier's expensive data plan.

Verizon disables bluetooth so you can't sync with your Address Book or send pictures directly to your computer.
Apple exerts tight control over the phone so you have a seemless experience syncing YOUR addresses, photos, music and photos.

I could go on...

Um, Apple exerts such tight control that you MUST use THEIR software in order to get all that seamless experience. Apple's locking you in, just locking you into their software, rather then their wireless service.

As for service plans, my contract with Verizon says that if something goes wrong with my phone in the first year, they replace it, no questions asked. With Apple, sometimes it takes dozens of phone calls just to convince them that you actually have a problem, and its not just your imagination.

[DonkeyRinse]

Originally Posted by Johnny Mozzarella

Is that why Verizon doesn't offer a single smartphone with WiFi built-in at any price level?
Apple didn't have to include WiFi, but they did because Apple wants to build compelling devices that will appeal to consumers.
Verizon wants to sell you a phone that will nickel and dime you to death and increase their bottom line.


Does any company have to have tight control over the hardware/software it makes? NO.
Unfortunately, we HAVE TO choose between a phone controlled by Apple, Cingular or Verizon.
I'll go with Apple any day.

you are 100% incorrect

verizon sells two PDA's that have WiFi

the samsung i730 and the XV6700

verizon has their own UI and cripples blueooth because 1.) 99.9% of the customers don't care and 2.) it prevents nightmare support issues. however they are slowly changing their ways, the LG enV has bluetooth file transfer

besides, verizon is unlikely to change anything since they just added over 2 million new customers this past quarter. cingular (once you take away prepaid activations) was only in the neighborhood of 800,000.

cingular needs apple more than verizon does. hence the deal.

[TenoBell]

Among them, Apple reportedly wanted a percentage of the monthly cellphone fees, a say over how and where iPhones could be sold, and control of the relationship with iPhone customers.

The iPhone will pretty much allow you to get around all of the extra media services that cell phone companies want to charge extra for. The part of this that sounds good is that left unabated cell phone companies would charge individual prices to unlock all of iPhones functionality and a large to price to use everything. That would render the entire concept of the device useless.

I can see the reason for Apple wanting to control all of this so that cell phone companies don't lock the phones functionality and hopefully not grossly over charge for all of the phones functionality.

Apple didn't put wifi in there so you won't be locked into using the carrier's data plan, they put wifi there because they are about to sell a $600 phone, and wifi was pretty much a must.

Well WiFi is there what's the difference as to why.

[Johnny Mozzarella]

Originally Posted by Louzer

Um, Apple exerts such tight control that you MUST use THEIR software in order to get all that seamless experience. Apple's locking you in, just locking you into their software, rather then their wireless service.

Let me put it another way...

If you want a phone that puts as few restrictions on you as possible, then a Linux smartphone is for you. You can code any app you want and you can write drivers to interface with your toaster. More power to ya.

Back to the real world...You have a choice in the current US cell phone market:
A phone crippled by Verizon (least functional)
A phone crippled by T-Mobile
A phone crippled by Sprint
A phone crippled by Cingular
A phone crippled by Apple (most functional)

Pick your poison.
I'm drinkin the Kool-Aid on this one.

[BlackSummerNight]

I feel that all these companies are trying to nickle and dime us to death. I've been with Cingular, and I know they want every penny out of your pocket. I'm sure in the end, they will try to push Apple into not allowing songs from your iTunes collection not to be used as ring tones. The ring tone business is major money for cell phone comapies, and I'm sure Cingular wants all the cash they can get off these new iPhones. But I can understand that.

Apple wanted Verizon to give them money from the service agreement, which I think is being greedy. It's all about money to these companies, which I understand because they are in business to make money. But in the end, it feels as if it's the end users (us) that pay the price. All in all, I'm a Cingular customer who will get a iPhone as soon as it's released.

[Johnny Mozzarella]

Originally Posted by DonkeyRinse

you are 100% incorrect
verizon sells two PDA's that have WiFi
the samsung i730 and the XV6700

Here is PCMag's initial review of the phone:

Originally Posted by PCMag

Boo. Hiss. Verizon's XV6700 could have been the best PDA/phone on the market today, with a great balance of small size, robust features, and decent call quality. Unfortunately, Verizon's decision to cripple the gadget's Wi-Fi abilities should send power users running to Sprint, which has a better version.

I was unaware that they have since released a patch to uncripple the WiFi.


The Samsung i730 won't be available till July 7th.

While I was wrong to some degree, Verizon's past motives are very clear and I hope they continue to change their business practices in the future.

[BlackSummerNight]

I wonder if Cingular plans on crippling their wifi abilities. My current smartphone doesn't have wifi, so I have to use their data plan. But if they don't cripple their wifi, I'm dumping it. I don't see the need for both. Wifi hotspots are everywhere.

Originally Posted by Johnny Mozzarella

Here is PCMag's initial review of the phone:
I was unaware that they have since released a patch to uncripple the WiFi.


The Samsung i730 won't be available till July 7th.

While I was wrong to some degree, Verizon's past motives are very clear and I hope they continue to change their business practices in the future.

[lantzn]

I hate Verizon, they cripple the phones they offer. Both my daughter and son have worked for them, my son no longer. We are all Mac users. My daughter always tells me how customers who use Macs complain about what Verizon does to their phones. As far as the networks go, I'm in the NW and when I'm in the basement of the capitol's buildings I have no problems calling out on my Cingular phone while the Verizon customers just start cussing at their service due to no connection. So many of my Mac using friends are moving over to Cingular. My wife and I are anxiously waiting for the iPhone. Thank goodness Apple went with Cingular.

[addabox]

Originally Posted by Louzer

Um, Apple exerts such tight control that you MUST use THEIR software in order to get all that seamless experience. Apple's locking you in, just locking you into their software, rather then their wireless service.

As for service plans, my contract with Verizon says that if something goes wrong with my phone in the first year, they replace it, no questions asked. With Apple, sometimes it takes dozens of phone calls just to convince them that you actually have a problem, and its not just your imagination.

The software is the product. Saying "you must use their software to get all that seamless experience" is like saying "Apple locks you into to using OS X to get the OS X experience".

Look, how would you like it if ISPs got to vet what devices got used on their networks? Apple brings out the iTunes Store, Earthlink says "oh no you don't, we are the ones that get to make money on music downloads, we won't let you sell computers that can access the iTMS."

That would be insane, no? The internet is like plumbing, and you don't want your plumbing editorializing about your choice in faucets or when you water you lawn or whether you use a Brita filter.

Verizon, though, owns the plumbing and they think that means they should get to control the whole process. They are wrong, and the market will prove them wrong once another carrier allows an ISP type relationship among user, hardware and service provider.

The iPhone is the catalyst for that. Sure, ATT doesn't have the coverage, but it improves all the time and there is finite land mass to deal with. But what happens when Verizon users notice that ATT users not only get the iPhone, they get real iTunes and real downloads and real connectivity? That non-geeks are actually using the calendaring functions and carrying around all their contacts?

The iPhone is a palmtop computer that uses a cell network as an ISP. ATT apparently agreed to serve in that role, and once people get a taste of that they're going to wonder why they put up with all the bullshit. Verizon wants to be the mainframe, with their phones as dumb terminals. We already know how that model worked out for the desktop.

[fizzmaster]

While there seem to be a lot of opinions on which is the worst carrier, the facts appear to be that Apple choose Verizon Wireless as their first choice. So, whether you like it or not, it appears to this Apple fan like Apple feels Verizon Wireless is the better option and only settled for Cingular after Verizon told them no deal.

[addabox]

Originally Posted by fizzmaster

While there seem to be a lot of opinions on which is the worst carrier, the facts appear to be that Apple choose Verizon Wireless as their first choice. So, whether you like it or not, it appears to this Apple fan like Apple feels Verizon Wireless is the better option and only settled for Cingular after Verizon told them no deal.

How do you know they weren't trying to get both?

[fizzmaster]

Originally Posted by addabox

How do you know they weren't trying to get both?

Only because the information says that it was an exclusive agreement for Verizon and also Cingular's contract is exclusive. It seems pretty clear, at least by the information available.

[addabox]

Originally Posted by fizzmaster

Only because the information says that it was an exclusive agreement for Verizon and also Cingular's contract is exclusive. It seems pretty clear, at least by the information available.

Ah, I hadn't caught the "exclusive" part of the Verizon story. You're absolutely right.

[JeffDM]

Originally Posted by Porchland

Wow. I just assumed the Cingular deal was one or two years. Five?

We don't know when it started. Maybe the five years started with that ROKR, but maybe not, because that phone was Motorola's deal with iTunes software.

I do agree that five years is a very long time.

[JeffDM]

Originally Posted by DonkeyRinse

verizon has their own UI and cripples blueooth because 1.) 99.9% of the customers don't care and 2.) it prevents nightmare support issues. however they are slowly changing their ways, the LG enV has bluetooth file transfer

I don't think that makes sense. If almost no one uses it, then it's not going to be a major support issue. I don't remember having problems with Bluetooth.