updated 11:55 am EDT, Fri October 29, 2010
Verizon iPhone negotiations explained in detail
An iPhone for Verizon is coming early next year but only after the results of three years of talks, an unofficial look has revealed. Along with an interview with soon to retire CEO Ivan Seidenberg, sources have claimed that a CDMA iPhone 4 is a "fait accompli" but that resumed talks started as far back as December 2007, when AT&T was starting to see call drops and delayed messages even on its 2G network due to the iPhone load. Verizon's wireless chief, Lowell McAdam, is said by Fortune to have been making amends for the mistake of rejecting the iPhone earlier but also seizing on AT&T's weakness, which only got worse with 3G.
"We really ought to talk about how we do business together. We weren't able to [deal] a couple of years before, but it's probably worth having another discussion to make sure we're not missing something," McAdam said at the time. Jobs is claimed to have said the Verizon executive was "probably right" and that "we have missed something."
The new interpretation of events had Apple coming to Verizon as early as 2005 with phone plans but being turned away for the level of control it wanted over the launch. It would have prevented many of Verizon's third-party resellers from carrying the iPhone and didn't like Apple's plans at the time to share revenue rather than subsidize the phone up front. Verizon in 2005 was also at the height of its attempts to micromanage its phones, often disabling Bluetooth features to force users to pay for 3G services and insisting on custom software that would ship in place of, not in addition to, what the phone manufacturer made.
Seidenberg had stepped in personally in spring 2007 and had complained to Apple CEO Steve Jobs that Verizon was in the "doghouse" after the AT&T exclusive, only to be told that GSM was making the iPhone launch easier as it would let one model cover most of the world. The carrier chief pointed both to beliefs in his network's 3G quality and the then-upcoming plans for LTE-based 4G, which would give it the same networking as AT&T and most other carriers over time.
The phone itself is believed to be CDMA- and EVDO-only despite images of a SIM slot in view, though the removable cards may be to cater to Asian users. Verizon is claimed to be looking at bringing apps to tie into its services, such as the live FiOS TV viewing coming to the iPad. It already has a FiOS remote for iPhones despite no actual devices.
In the interim, Seidenberg has spent much of his time collaborating with Google, whose Android platform quickly ousted the BlackBerry as the preferred mobile OS on Verizon. He has tried to sidestep criticisms of a joint Google and Verizon proposal on net neutrality that would conveniently exempt the cellular business from regulation designed to prevent discrimination against competing apps. While critics have accused Google of "selling out" its ideals to court its favorite Android partner, Seidenberg in the interview was seen as conceding that Verizon needed a 'little bit of policing.'
For Apple, eroding the tight partnership is a key goal. AT&T's exclusive with the iPhone has kept it growing faster than Verizon even with major iPhone-related network trouble in New York City and San Francisco, but the deal is thought to have given Google a safe haven where it could get the unfettered attention and marketing efforts of a single carrier. Verizon is still the largest single driver behind Android growth, and an iPhone on the network would at least dampen the growth or even lead some to drop Android for an iPhone with their next upgrades.