Verizon Rejected iPhone Deal

SnowDog74 writes "According to an article in USA Today, Verizon Wireless rejected an Apple deal over the iPhone. The article says that Verizon wasn't happy with the strict terms Apple demanded — a Verizon Wireless VP is quoted saying that Apple wanted a cut of monthly revenues and control of the customer relationship. What's perhaps equally interesting, however, is the implication from sources that say Cingular's exclusive 5-year deal with Apple applies within the United States only. If this is true, it undermines some of the criticism Apple has been receiving for their business strategy surrounding the iPhone, given the size of the cell-phone market outside the US."

iGot

[by Anonymous Coward]

iGot First Post

Thanks,
Cingular

interesting? no.

[grub (11606)]

What's perhaps equally interesting, however, is the implication from sources that say Cingular's exclusive 5-year deal with Apple applies within the United States only.

duh... perhaps Cingular isn't used outside the US (or very much?) They aren't in .ca, for example.

Re:interesting? no.

[Andy_R (114137)]

Exactly. Cingular have no visible presence at all here in Britain either, nobody expected that deal to apply here either.

Re:

[by Anonymous Coward]

Why does that matter? The deal with Cingular has been reported to mean that the iPhone is exclusively available to Cingular customers. For Apple to sell the phone overseas, that exclusivity clause would have to specifically indicate the US market only or Apple could get sued by Cingular for selling the iPhone in other countries.

So it's still important to note that the deal with Cingular applies only to the US market because it opens up the possibility that the iPhone will be available to users in other co

Re:

[timeOday (582209)]

It's laughable to discuss whether Apple has a monopoly in the cellphone market. Apple hardly even has a presense in the cellphone market. All they have is one insignificant product (the Rokker (sp?)) and one product announcement. It's amazing to me how many people assume Apple will be a big success in cellphones, just because they hit the jackpot once with the iPod. Who's to say the iPhone won't be more like the Netwon?

Re:Mono, what? Poly or something?

[Fred Ferrigno (122319)]

The ROKR was a Motorola phone using their OS and an iTunes-branded MP3 player. The mobile version of iTunes was written in Java and is likely completely custom. The ROKR was discontinued and replaced with the SLVR L7, a bar phone version of the RAZR. SLVRs purchased through Cingular or Rogers Wireless in Canada still come with iTunes, although Apple officially stopped supporting it in September and new music purchases won't play back. Phones sold elsewhere come with a Motorola-branded MP3 player instead of iTunes.

Long story short, Apple has yet to sell a single cell phone. Frankly, I'm all with you on the Newton analogy. Once Apple dries up the supply of people who will buy anything with an Apple logo, I don't think the iPhone is going to sell very well at all.

Re:

[calbanese (169547)]

Actually, legal scholar, its not the Slashdot Court of Public Opinion. Its the Supreme Court and the Sherman Act.

"The offense of monopoly power under 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).

Re:

[Fred Ferrigno (122319)]

Actually, it's more like Cingular bought AT&T. Cingular bought AT&T Wireless in 2004, which had been spun off as a separate company from AT&T. Later in a separate move, SBC (Cingular's parent) bought AT&T, taking the name for themselves.

Service & retailers: the other side of the coi

[sporkme (983186)]

Granted, the revenue stream from added features seems to be the principal deal-breaker, but TFA also highlights that Verizon would be cut out of certain customer service decisions. However you feel about the company, they do pride themselves on their customer satisfaction numbers. As a retailer, I found their policies to err on the side of customer benefit.

Apple's terms would have cut out major retailers when it comes to the handset, making it more difficult to retain those retail partners. It also would have taken warranty policy from the carrier to the manufacturer - and the iPhone would be the only handset with this arrangement. I think customers would have hated it, but maybe Apple planned to be more fair. How are they on iPod warranty?

Verizon has been treading lightly with retailers since their split with Radio Shack (over R$ revenue). The separation hurt both companies right off the bat, and the implications of the separation are still developing. If Wal-Mart and Best Buy were cut out of the iPhone deal, they might have such a sour taste that they skip off to Cingular instead.

If Cingular's terms do not exclude third-party retailers, Verizon will suffer anyway.

Re:Service & retailers: the other side of the

[Tarwn (458323)]

Customer service numbers? They might pride themselves on those numbers, but they are as full of crap as their systems. I'm sorry, any company who has a known issue of the IVR dropping options off of peoples accounts for years, that then decides to not fix the IVR system is not what I would call customer-oriented.
Or how about the fact that they care so much about their customers that they require their call reps to handle anything non-call related in their spare moments between making call quotas? You know, those little things like recalculating bills that have gone awry (see IVR) or filing the paperwork...

My wife worked for Verizon, the only thing they care less about then their customers is their computer systems - except for th mice, those have to be installed by an expert technician. Probably not the same one that installed the fully tested software update that took down your entire department yesterday, cannot be backed out of, and is costing you your paycheck (if your not answering phones, your not earning...)

Yep, customers are number one, provided you qualify that statement as "after everythig else but the computer systems..."

Re:

[sporkme (983186)]

I don't doubt any of this. Big companies can never seem to nail the IT end of things. I never had a problem, however, calling in and getting problems solved with a Real Human Being (TM). For Sprint, Cingular and prepaid cellular accounts, getting problems fixed is typically a monumental task. I think Verizon's call center employees are more likely to be willing and able to help compared to other providers, based on my experience. We used a special number that got us straight to the retention department

Re:Service & retailers: the other side of the

[um... Lucas (13147)]

As a retailer, I found their policies to err on the side of customer benefit.

Ermm... I had 4 lines on a family plan...We were all happily using our 1800 minutes or whatever, and i was paying 170 or 180 a month. One month, there was a crisis in the family, and the total of calls was quite a bit in excess of our minutes, to the point that my bill was $680... I called customer service and explained the situation, and they said they'ed forward that along with a backdated request to up my minute allotment since i never went over and always paid on time... They said that this was a situation they've had before and that was usually the way that it was remedied... a few days later, i got a call from them that said that billing had determined that it "wasn't in the customers best interest" to do so...

Now, if they had said "sorry, but there's nothing we can do about it" that'd have been one thing... But they said "there is something we do about that" and then turned around and decided NOT to... That has made me one unhappy verizon customer... Of course, I'm sticking with them because my contracts up in June, and guess what comes out then on another network?

So no... I can't see how verizon is a customer service oriented carrier... everything with them is like pulling teeth...

Re:

[rizzo420 (136707)]

i am a verizon customer and from what i've experienced customer satisfaction is a top priority. i received a phone in a store at the online price for new customers and without the mail-in rebate because i almost walked out. i've had mistakes made in their favor turn to my favor. and i've had no problems dealing with their sales people and technicians in their stores or over the phone.

i won't even go into how few dropped calls i've had or how great their service is in traditionally low service areas. cin

Let's see how Verizon feels at the end of the year

[TheSlashaway (1032228)]

Let's see how Verizon feels at the end of the year when a googazilion iPhones are sold.

Re:Let's see how Verizon feels at the end of the y

[TheSHAD0W (258774)]

Yeah, and Apple gets 500 googazilion dollars of revenue.

Then gets sued by Google for revenue similarity...

not sure they care

[johnpaul191 (240105)]

honestly, Verizon is often kind of behind the curve on the newest and coolest phones. i always assumed they were secure with massive business plans and didn't have to deal with that.
on the other side, maybe they didn't want anything to do with it. they are notorious for ruining cool potential features to ensure a revenue stream. they try to cripple cameraphones with that terrible pixplace thing, they trash bluetooth. i would think the iPhone is not screwed down enough for them, though it's possible the nego

Five years?

[Rodness (168429)]

That's one hell of an exclusive deal. As much as I hate Cingular and their pricing plans, I'm not sure I can wait five years for other networks to have that phone... especially if they put out a nano-sized version.

Sigh... why oh why can't I have my apple and eat it too?

They've got the business model all worked out

[User 956 (568564)]

As much as I hate Cingular and their pricing plans, I'm not sure I can wait five years for other networks to have that phone..

What, you mean $31,000 a month for Cingular service [heraldtribune.com] isn't cheap enough for you?

Re:Five years?

[Frogbert (589961)]

Americans need to get with the program. I don't know how your phone systems work there, but in the rest of the world all you need to do to change phones is to buy the phone and put your sim card in it. What is going on over there?

Re:

[jZnat (793348)]

Competing standards on how to transmit and receive on the phone (GSM isn't the only one here), and mobile phone company subsidising of cell phone prices with contracts (otherwise the phones are a lot more expensive, and I don't even know where you can buy the normal, unlocked phones without a contract).

Re:

[AaronLawrence (600990)]

The question wasn't "why do the carriers do it" but "why do americans put up with it?"

Land of the Free to be shafted and used by the corporations?

Re:Five years?

[dcam (615646)]

The biggest WTF in the US mobile phone system is you pay to recieve calls.

Re:

[anothy (83176)]

you've missed the point. it's overwhelmingly likely that you'll be able to do exactly that with the iPhone, just like you can with the vast majority of other GSM phones in the states (getting phones unlocked is not tremendously difficult, and when it costs you anything, i've never seen it break about $20). but with a two year contract, i'm tied to paying that operator, like it or not. let's say my bill's $40/month; that's $960. certainly more money than most people are wiling to just eat. the early terminat

Re:

[MojoStan (776183)]

you've missed the point. it's overwhelmingly likely that you'll be able to do exactly that with the iPhone, just like you can with the vast majority of other GSM phones in the states (getting phones unlocked is not tremendously difficult, and when it costs you anything, i've never seen it break about $20).

Not according to Glenn Lurie, Cingular's president of national distribution. From a PC Magazine article [pcmag.com]:

While "there are bad guys out there that unlock phones," Lurie said, Apple and Cingular are taking unspecified steps to make the phone more difficult to unlock and use on other GSM carriers in the US.

So Cingular and Apple will supposedly make it difficult to unlock the iPhone. Also, you're a B

Re:Five years?

[MattHaffner (101554)]

Americans need to get with the program.

What? We are the program. We made it, we run it, we sell it. Free market, baaay-beee! Get with the program!

I mean look at our cable, land-line, and internet markets. It's all about competition and survival-of-the-fittest over here. The consumer rules! We have the best services for the best prices anywhere in the world. By definition. Anything, anywhere else is just some mock-up of the free market we have in place here in the U-S-of-A, likely held together with some pseudo-socialist glue. Our companies live and die in the market trenches without any pansy help from the government. Sheee-ooot.

Cheney/Lay 2008!

Re:

[jonwil (467024)]

Here in Australia with Telstra, you can buy phones on contract from Telstra and said phones are NOT locked to the Telstra network. Of course if you want to drop out of the contract before its up, there are early termination fees that you have to pay. You can also walk into the store and buy any phone they sell outright with no contract, no subsidy and no network lock and then use it with any carrier that is compatible (in australia or otherwise)

The only phones Telstra lock to their network are prepaid phone

Re:

[babbling (952366)]

What's so special about the phone? It can't run 3rd party applications, so the only interesting things it can do are:
- Play music crippled by DRM
- Surf the net
- A few features that all PDAs have, such as calendar and notes

The interface is nice because it's a big touch screen, but if my experience with Apple hardware is anything to go by, it won't be very durable.

The only thing the iPhone has over other PDA phones is Steve Jobs and Apple marketing it. By the time it comes out there will probably already be a

Verizon's big mistake

[Ankou (261125)]

Ya think this is one of those times like when the guy who didn't sign the Beatles for a record deal? At anyrate, I find it funny that there are statements like free 18 months [thestreet.com] switching from Verizon to Cinguar with the iPhone. I have no idea if this is true or not, but it would be quite a slap in the face. Maby this will be a wakeup call to the cell phone companies that they are completly clueless about the market they control.

Re:Verizon's big mistake

[Veinor (871770)]

The Consumerist has reported that the free 18 months is false [consumerist.com] (original story [barrons.com])

It's all about branding

[EmbeddedJanitor (597831)]

Apple is a fashion brand, and Cingular (AT&T) probably is not. One of the biggest headaches for Apple is getting the right branding partners so that the iphone does not get associated with stodgy/boring services. Cell phone companies really hate churn. The iphone will probably have significant brand loyalty (as ipods do) and an exclusive deal will combat churn. However Cingular will have to come up with suitable ad campaigns etc to make sure that they appeal to the apple set otherwise both brands will s

As a Verizon customer

[twbecker (315312)]

that has no intention of switching to Cingular, iPhone or no, I can believe this. Verizon gives me the best coverage and call quality (which believe it or not is what I value in a cell phone company ;), but they demand total control of their phones and what you put on them in return. Between neutered Bluetooth and very few ways to get anything onto the device short of VCAST, they make Cingular's openness seem pretty tempting. But I've heard too many complaints about Cingular's network to consider switching.

Re:As a Verizon customer

[Buran (150348)]

"but they demand total control of their phones and what you put on them in return."

That's exactly why Verizon would never accept the iPhone. Apple wants total control over the phone and its design and how it looks. Verizon wants the same.

What do you get when two immovable objects stare across a room at each other?

The third one that realizes that denying people the ability to do what they want with what they pay for gets the big deal. Cingular doesn't cripple its phones.

Verizon getting the iPhone would have shocked me.

I'm also glad it didn't go CDMA in general -- I don't want to have to call support just to do something simple like change phones.

Apple iPhone

[softcoder (252233)]

Well there has already been an announcement from a Canadian cell phone company that they will also be carrying the iPhone. You will note too that Apple chose GSM, the European and worldwide standard, as opposed to CDMA, a primarily NA one, for the phone. Does that tell you anything?

Re:

[icebike (68054)]

"You will note too that Apple chose GSM, the European and worldwide standard, as opposed to CDMA, a primarily NA one, for the phone. Does that tell you anything?"

Yes, it tells us that GSM penetration in the US and Canada is almost at 50% of the area covered by CDMA.

Its really pointless the keep harping on this CDMA/GSM rag. GMS is fine for itty-bitty countries where you can't get out of sight of the nearest town. It takes vastly more towers than CDMA. In Canada, and the US those towers are being built at

CDMA phones are unfriendly to free software

[tepples (727027)]

Its really pointless the keep harping on this CDMA/GSM rag.

The problem I've seen with phones that use Qualcomm's IS-95 [wikipedia.org] system (often called CDMA after its physical layer) is that phones for IS-95 often support only Qualcomm's BREW environment [wikipedia.org], which uses digital signature requirements to shut out developers of shareware, freeware, and free software from porting their software to common IS-95 phones. As I understand it, phones that support GSM are more likely to support Java ME MIDP [wikipedia.org], which generally allows anybody to compile and run a midlet.

Re:CDMA phones are unfriendly to free software

[anothy (83176)]

you've identified three separate things which are entirely unrelated, and implied a correlation.
first, choice of network technology has nothing to do with application environment. Sprint, for example, is the second largest CDMA operator in the US, and does not sell a BREW phone (to the best of my knowledge; certainly the vast majority, at least, of their phones are Java-based phones). it is true that BREW is a sure sign of a CDMA phone, but the inverse is not true. even on Verizon's network, for example, see the Palm devices as a counter-example: no BREW even available.
second, choice of application environment has nothing to do with signing requirements. several operators who have java application environments on their phones require signing or other forms of controlled distribution and application loading for apps to run; see, for example, Nextel. also, nearly every vendor that allows unsigned apps to run on their devices (which is most of them) restricts unsigned apps' access to certain features, most commonly the PIM functions and things relating directly to the phone network, like sending SMS messages. to access those features, every network i've looked at (which is all the major US ones and a small handful of european ones) require signing.

Whats the big deal?

[schnoid (834307)]

People act like the iphone is THE gadget that will ruin all other service providers if they don't have it. Considering its hardly even a smartphone because you can't even add software to it, it seems to be very lacking. Its only major benefit over something like a treo is the size and style of the phone. People need to get a grip. Other cell providers will not be going out of business over this.

not a match for Verizon

[r00t (33219)]

Verizon wants to disable EVERYTHING on the phone that isn't pay-per-use. If you were thinking the iPhone was restrictive, think again.

Re:

[Reaperducer (871695)]

$5 for Internet on my phone per month, plus data? 10 cents a piece for a text message that is less than 250 bytes? $3 per ringtone that I can get on iTunes(TM) for a single $? Not to mention the numbers listed as having called my phone that I have never heard of? Measuring calls in minutes instead of seconds?

Doesn't sound like you need a new country, just a new phone company.

$5/month for unlimited data? Sounds like T-Mobile USA. 10 cent text messages? Sounds like T-Mobile USA and a number of others. I

Re:

[Paulrothrock (685079)]

Outside of some large urban centers, smaller carriers are really hit-or-miss. I had T-Mobile for a long time. When I lived in Scranton, PA I had no trouble using it. Full coverage even out in the hills at school.

But when I moved to Harrisburg, I had horrible service. I couldn't even use it at my parents house within line of sight of a cell tower less then a mile away. That's when I switched to Cingular. My wife and I have been extremely pleased with the coverage and haven't had any troubles with dropped ca

Exclusive to Rogers in Canada

[Rix (54095)]

However, I believe we have the right to demand locked phones be unlocked, so I'm not sure how that will play out.

Good

[tehaxer (959342)]

Verizon's the best carrier in the US, and they rejected a stupid phone that came with a bunch of rules that would have been bad for them and their customers. I have no doubt that apple fanpeople will eat up the phone, but I don't think the hype is enough to carry a non-fanperson all the way through buying a 500$ phone that is about the same size as the new Samsung (and probably other companies') PDA phones, yet doesn't have real pda functionality, integration with things that matter (mine is 2 years old and handles exchange, secure imap and smtp, has picsel, a great browser which samsung quietly distributes, and which apple I'm sure would devote an entire SHOW to since they have such limited resources that creating such a thing would feel like a big deal to them), a keyboard, 3g networking, 3rd party programs, sd slot? (Not sure...). It's not a good fit for a Verizon or Sprint, since they're serious carriers. Cingular is perfect for the iPhone. T-Mobile, too.

I mean, telling everyone a product you're releasing into a market that has generally been considered the highest of high tech for the last 5 years, then actually using 'High Technology' as the 4th bullet point on the front of the box and all your advertising is pretty stupid. I think the Verizon decision makers probably played out a sales scenerio in their heads between one of their reps and someone like me (I'd imagine a fairly typical Verizon customer), realized it made them look like idiots ("But but, it's HIGH techNOLOGY!!") and decided they'd let the kiddie carriers deal with the kiddie customers.

eff ell aim!

Lucky us

[fermion (181285)]

While verizon might be good for some people, for those of us with good Cingular coverage, verizon just seems like an overpriced, pompous, and unresponsive company. They probably would have wanted to do stuff like cut out the address book feature and have music and video transferable only over their network.

While I understand that many people find Cingular to be joke, I am happy that cingular was flexible enough to adopt a phone that will likely force them to reevaluate their business model. They will certainly have rethink the data rates, and they are not likely to make any money off music downloads.

In a couple years, I am sure verizon, and it's customers, will be perfectly happy with the iPod knockoff Zunefone, with it's verizon only music downloads and it's DRM protected overpriced ringtones. I am sure everyone will continue to say how great Verizon is, and how the Zunefone surpasses the Apple phone is copies, although even today, with existing products, neither is true.

Five years? Thought it was two.

[straponego (521991)]

I could swear the clowntards at Cingular were crowing about a two year exclusive deal. Also, they mentioned that the Cingular name and logo would ALWAYS be on screen. Doesn't that mean they were effectively lying about the resolution, as some of the resolution will always be used only in a user-hostile fashion?

Ah well, the hardware looks great and it's certainly a platform which could handle almost everything you could want from the current generation. Too bad it's going to be on a crappy, slow network run by a company which is gloating about how badly it can treat its customers due to having a monopoly.

Good news: this will make Linux-based phones much better, much sooner.

Re:

[MojoStan (776183)]

I could swear the clowntards at Cingular were crowing about a two year exclusive deal.

As another replier hinted, you might have misinterpreted the required two year Cingular service contract that iPhone buyers must agree to. However, I think you're correct about them being clowntards...

Also, they mentioned that the Cingular name and logo would ALWAYS be on screen. Doesn't that mean they were effectively lying about the resolution, as some of the resolution will always be used only in a user-hostile fa

Fuck Verizon

[Mix+Master+Nixon (1018716)]

A loathsome company even by teleco standards, they really and truly despise their customers and Microsoft could learn a thing or two about pure rancid evil from them. I've had multiple friends and relatives tell tales of $1000 deposits to get cell phone service from them. That is so far out of proportion to reality it boggles the mind. The ONLY thing they have going for them is that they have better coverage than their competition - but it's not worth it, not even close, and the competition is rapidly catching up to them. All their phones are hobbled with their awful, locked-down software - even if it WASN'T locked down, their software is pure crap. When my contract with them is up, I run far far away, and they never get another dime of my money for anything, ever.

And I can't help but think that I'm not the only person who feels this way. Their customer-hostile antics will eventually bite them in the ass, and I am going to enjoy watching that happen as much as I'd enjoy watching Microsoft implode - maybe more.

smart move

[PureCreditor (300490)]

by far the world's users who are willing to pay premiums for nice phones reside outside USA. go with verizon, and u'll limit yourself to handful of CDMA countries. go with cingular, and u'll open up nearly every country in europe and asia.

people in USA are too used to these "$49 RAZR" deals that they can't possible imagine paying $499 for the iPhone. european and asian users will. now if we can get Apple to strike deals with SK Telecom or NTT DoCoMo, then u're all set.

iPhone to NOT be sold in Cingular stores

[siberian (14177)]

Was chatting with the local Cingular store manager and he mentioned that the iPhone is only to be sold from the Apple store. The local store franchises will not be allowed to sell these units.

He was a bit peeved, he's fielding 10 calls a day on the damn thing and just feels the dollars flying down the block to the Apple Store.

In Palo Alto on University Ave.

Might be common knowledge, I was suprised.

Re:

[nuckin futs (574289)]

go watch the keynote on the iphone introduction. Fast forward to about an hour and 8 minutes into it.
Steve Jobs mentioned it will be available in Apple Stores AND Cingular Stores.

Re:Cingular needs all the help it can get...

[maxume (22995)]

I'm pretty sure the worst phone company is the one the person you are asking last moved away from, and the best one is whatever they have, unless they think that they all suck.