New AT&T iPhone Exclusivity Details Uncovered; Verizon iPhone Coming in 2012 Only? [AT&T - Apple iPhone Exclusivity Deal Now Confirmed to Have Been Signed for Five Years; Bad News for Verizon]

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Alright, iPhone fans, whether you’re an AT&T subscriber or a Verizon faithful customer, we have some pretty big news for you. Remember how we kept talking about AT&T’s iPhone exclusivity deal and the imminent Verizon iPhone 4G launch all through the year so far? Well it looks like an important piece of the puzzle has been revealed: the length of the actual Apple – AT&T iPhone exclusivity agreement.

It has been confirmed already that AT&T and Apple entered a five-year iPhone exclusivity deal back in 2007 which means that if the contract hasn’t been breached/amended in any way, Verizon, or any other carrier for that matter, will only see an iPhone in its stores in 2012. That’s such a terrible long time to wait and I bet neither Apple nor AT&T’s competitors are pretty happy about this whole predicament.

Since 2007 the iPhone has proved to be a money mill for both Apple and AT&T. But in order for Apple to keep cashing even more on the phone, the iPhone has to be taken to Verizon, the number one carrier in the USA by sheer number of subscribers.

The initial Apple – AT&T contract was supposed to last for five year and it has all been confirmed thanks to a class action suit filed in California. Apparently both Apple and AT&T are alleged to have exerted a monopoly over the iPhone service from the start. iPhone future customers have been told they are required to sign a two-year agreement with AT&T in order to be able to get the device but nobody told them they’ll have to stick with AT&T when the contract expired since AT&T was, according to the initial agreement, the only carrier partner of Apple.

On the other hand those people filing the suit must know that even if customers would have wanted to use the iPhone with any other carrier after the two mandatory years expired they wouldn’t have had much freedom when choosing an alternative. Or at least they wouldn’t have been able to fully enjoy any other carrier, but that’s only valid from the moment Apple launched the iPhone 3G in 2008. Why? The reason is quite simple: AT&T is a GSM carrier with different 3G bands than T-Mobile which is also a GSM operator. Verizon and Sprint are both CDMA-based mobile services providers so the iPhone wouldn’t work on their networks whatsoever.

At the time of the filling of the trial the only AT&T alternative for the iPhone, and I am talking Big Four carriers only here, was T-Mobile’s 2G network. The first iPhone was a 2G-only device so it could have worked, in theory, on T-Mobile’s network. But that five-year contract would not officially let iPhone users sign deals with T-Mobile after those two years of mandatory AT&T contract since the iPhone wouldn’t be unlocked at the termination of said contract. And it looks like various documents from the trial mention that the Apple – AT&T agreement was signed for five years. Here are some excerpts:

“The duration of the exclusive Apple-[AT&T] agreement was not ‘secret’ either. The [plaintiff] quotes a May 21, 2007 USA Today article – published over a month before the iPhone’s release – stating, “AT&T has exclusive U.S. distribution rights for five years-an eternity in the go-go cellphone world.”
…
“[T]here was widespread disclosure of [AT&T's] five-year exclusivity and no suggestion by Apple or anyone else that iPhones would become unlocked after two years… Moreover, it is sheer speculation – and illogical – that failing to disclose the five-year exclusivity term would produce monopoly power…”

Three years later, in 2010, people are talking more and more about the Verizon iPhone. Considering that Android is becoming more and more popular in the USA and worldwide, Apple is forced to move to other carriers, in the USA and worldwide, in order to survive, on the long run, in the mobile business. But three years later we still don’t know if Apple has amended the contract in any way. After all, this partnership with AT&T has brought plenty of negative hype around the iPhone, caused mainly by AT&T’s lack of consistent support for the device. Sure there are other flaws with the handset (App Store approval process, lack of Flash support, lack of certain features in previous generations) which people have been criticizing but aren’t related to AT&T. AT&T’s numerous network problems (lots of dropped calls, clogged data network, lack of MMS and iPhone tethering support, blocked iPhone apps) give Apple plenty of reasons to terminate this AT&T partnership a little earlier than five years.

Unfortunately at this time we don’t have any more details regarding the expiration of this exclusivity deal. Worst case scenario, for Apple, AT&T, Verizon and the customers, would be for this contract among giants to expire only in 2012. Everyone will only have to lose assuming that AT&T holds the iPhone exclusivity deal until 2012 so we’d be really curios to see when that Verizon iPhone will actually hit the streets.

We’ll be waiting for your opinions so hit us in comments. What do you have to say about this whole iPhone exclusivity arrangement? Who is getting the iPhone 4?