Report: Verizon Passed on iPhone Deal

According to a report in USA Today, Verizon was offered exclusive access to Apple's recently unveiled iPhone almost two years ago, but rejected the deal due to its stringent terms. Apple ended up partnering with Cingular for the $499 iPhone, which debuts in June.

According to the paper, Apple insisted on limited distribution of the iPhone: CEO Steve Jobs wanted the device sold only in Verizon retail stores and Apple stores. All other distribution partners, including Wal-Mart, Best Buy and smaller resellers would have been left out.

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

In addition, Apple wanted sole control over customer service of the iPhone. Verizon says that it did not want to step back and rely on Apple to provide support to its customers. Cingular has yet to detail its distribution plans for the iPhone, but said it would field service calls regarding the device.

Apple reportedly also wanted a cut of monthly fees. Such a requirement would be unprecedented in the mobile phone industry, as carriers usually subsidize the cost of handsets but never pass on recurring charges. Cingular is unlikely to have agreed to that stipulation, as its customers can switch phones by simply swapping their GSM SIM cards.

Cingular has a five-year exclusive with the iPhone in the United States. Apple will partner with other carriers in Canada, Europe and Asia, although has yet to make any announcements in those regions. Pricing is set at $499 USD for the 4 GB model and $599 USD for the 8 GB model, with a 2-year contract from Cingular.