The complicated tale of AT&T’s exclusive U.S. iPhone deal

invisibleSHIELD case for iPad“The details of Apple and AT&T’s agreement in the U.S. for exclusive iPhone rights is a bit like a mythical beast. Every so often, someone comes along and says they’ve seen it. But when someone else starts to look, it vanishes again,” MG Siegler reports for TechCrunch. “Today, we have the latest sighting compliments of Engadget. But it appears that it may be a sighting of an old picture, rather than the actual live beast.”

“Un 2008 Apple and AT&T apparently agreed to an extension — into 2010, USA Today reported citing ‘people familiar with the matter’ who asked ‘to not be named because the terms are confidential,'” Siegler reports. “The reason for the extension? The huge payout AT&T was giving Apple for each iPhone sold, apparently.”

“And then, in April 2009, The Wall Street Journal reported that AT&T’s exclusive agreement ‘expires next year,’ citing sources familiar with the matter (that’s inline with the latter USA Today report),” Siegler reports. “They go on to note that, ‘Mr. Stephenson is now in discussions with Apple Inc. to get an extension until 2011.'”

Siegler reports, “So if the initial contract had AT&T getting the iPhone exclusively through 2012, why would WSJ and USA Today report that it expired first in 2009, then in 2010? Well, either their sources were flat-out wrong, or (and I think more likely), the contract has changed over time.”

Full article here.

MacDailyNews Take: Steve Jobs plays several moves ahead. The AT&T contract therefore likely contains several “outs.” For example, poor performance of AT&T’s 3G network. By the way, AT&T, where’s the tethering that you started promising iPhone users was “coming soon” at least as long ago as November 6, 2008?


  1. Tethering also works great on Rogers in Canada. Did a video iChat while on the road from Montreal to Toronto. The quality was fantastic! It was one of those, “OMG, I’ve dreamt of this moment my entire life” moments. People I was chatting with were blown away when I turned my MacBook Pro around to have the camera face out the windshield to show them we were driving down the highway. Too bad we can’t tether the iPad to our iPhones… 🙁

    AT&T;has dropped the ball big time.

  2. I suspect the original deal was for UP TO five years; it included the option to extend. No way either was signing for 5 for such a revolutionary deal.

    Also, the original 2007 deal did not include ATT subsidization of each phone. Instead, they paid Apple a share of the monthly rev. But with iPhone 3G, Apple went to subsidy route, which meant no monthly fee from ATT — the contract had to be revised to reflect that.

  3. There is NO EXCUSE for ATT’s CEO saying they would allow tethering in the near future or soon, as it is sorely needed.

    1. If you need data every day, all day on the road, OK, then $60/month for a cell card is needed.

    2. If you only get email updates when you happen to be away from WiFi, like en route to a meeting, you should be able to get it on an “iPad” like plan for our iPhones.

    There is a chance that we have been led astray, and to promote the iPad, our leader SJ, has told ATT not to allow tethering until after the iPad release to not disrupt the iPad fever out there.

    Whatever the reason, it is way past time to let iPhone users get a $20-20/month set of data plans. There is NO EXCUSE now.

    I am personally PO’d. I dropped Verizon’s data card, as I got a new MBPro and needed a USB modem, instead of my prior Express card slot. Verizon said $129 and we extend your contract 2 years. I told them they give me the modem for free and screw the extension or I was leaving. They didn’t, I did. Starbucks and Barnes & Noble get more visits from me now, until I can get tethering.

    I have a hard time understanding Steve Jobs not working the deal to get tethering.

    Data Load on Cell Circuits: ATT doesn’t want people with heavy data loads clogging the system, but that is what a limited data plan for tethering can accomplish.

    Yeah, I am steamed at everyone right now.

  4. The deal could be about FIVE full years, but only about THREE generation models.

    This means 2010′ model may not already be exclusive; older models will keep being exclusively working, sold and supported through AT&T;until 2012.

  5. i really don’t see the iphone coming to Verizon until they have the 4G network completed 100%. It’s all about the user experience and CDMA technology is limited like surf and talk. Another thing CDMA will cost more than GSM version with limitation. Since Quadcomm will get pay just for Apple to use CDMA chip.

  6. The original deal probably was for 5 years, but it was reworked after the first year. I believe ATT wanted to go to a subsidized model because then the initial costs to buy an iPhone was dramatically reduced, encouraging hundreds of thousands of additional people to buy an iPhone and get locked into 2 year contracts with ATT.

    Remember, ATT was (and still is) in a race with Verizon to add customers, particularly smartphone customers with data plans.

    As consideration for dropping the subscription model payment to Apple, the length of the exclusive right to carry the iPhone was reduced and Apple received subsidies per iPhone.

    ATT likely thought that once it had people on iPhone contracts, it could keep them there. Just look at how ATT is already bumping the dates for people to receive a discounted iPhone when they are only a year into their 2 year contract. Most people will stay with ATT if they can get the new iPhone rather than spend another year with the same old iPhone and then switching to Verizon.

  7. Bashing and bashing iPhone’s exclusive signal provider is misplaced bashing.

    Were it not for MDNs obsession with the “genius who plays several steps ahead” – you know, the guy who granted the exclusive deal – then we would not be having these conversations about poor quality signals and service.

    But, since lord Jobs can do no wrong, we will continue to see this bashing – no matter how wrong the target.

  8. AT&T;lies every time they open their mouth. The only reason that Steve Jobs has anything to do with them is that their competitors are just as unreliable. The sooner they all go away, the better. Once internet access becomes ubiquitous, telephone companies are history.

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