Apple is bound to its exclusivity deal with AT&T until at least 2010, sources have allegedly told USA Today. The newspaper asserts that AT&T agreed to the large-scale subsidies on the iPhone 3G's pricing in exchange for a one-year extension on the provider's sole rights for the device line in the US, pushing it back from its original 2009 date. The extension is crucial for AT&T, which is the leader in an increasingly saturated market and sees the iPhone as a tool to convert customers from other networks. The news on Friday would represent the first more definite timeframe attached to the agreement.
Under the original terms, Apple would have been free to sell the iPhone through T-Mobile USA next year as well as to consider developing a CDMA-based version that could be used with Sprint, Verizon and other predominantly North American carriers. Some potential customers have either refused to buy the iPhone or else resorted to unlocking first-generation models due to AT&T's coverage limitations or support.
Neither Apple nor AT&T has ever disclosed the actual expiry date of the exclusivity deal, though some had speculated the term could be as long as five years from the iPhone's initial launch. AT&T chief Randall Stephenson has only said that he and AT&T are "very happy" with the terms of the deal.
The new reported end date is potentially ideal for Apple given network deployments in the US. At present, the iPhone 3G would lose 3G access on T-Mobile's network, which has only just begun deploying any form of 3G cellular access and is currently limited to New York City. Verizon and its acquisition target Alltel will also both launch 4G service in earnest sometime in 2010 and will use Long Term Evolution as their standard, a format that will also be shared with AT&T and allow a future 4G-capable iPhone to run on either network.
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