Apple, AT&T struck five-year deal in 2007; now, who knows?
By Dan Moren, MacworldMAY 11, 2010 2:19 am PDT
Though we’ve been hearing about the exclusive deal between Apple and AT&T since the latter was still going by its maiden name, Cingular, the exact terms of that deal have long been shrouded in mystery. Now, a court filing from 2008 gives us another data point, even if it does little to shed light on where the partnership currently stands.
Tech blog Engadget
perused some recently released documents in an ongoing class action suit, originally filed in 2007, alleging that AT&T and Apple held a monopoly over iPhone service by locking customers into a multi-year deal that extended beyond the two-year contract customers had to sign (by virtue of the fact that no other network offered the iPhone.)
In arguing against this, Apple
filed a brief in October 2008 stating that there was absolutely nothing secretive about the exclusivity deal. As evidence, the company cited a 2007 USA Today article:
The duration of the exclusive Apple-ATTM agreement was not “secret” either. The [Revised Consolidated Amended Complaint] 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.”
That USA Today article is itself the source of most, if not all, allegations of the contract’s five-year term; neither Apple nor AT&T has ever spoken on the record about the length of the deal. Further confusion stems from the fact that multiple sources later began referring to the iPhone deal as expiring in 2010—
including Leslie Cauley, the very same USA Today writer who penned that 2007 article.
So, as far as we know, the actual contract is a riddle, gift-wrapped in an enigma, parachuted onto the island in Lost. And then eaten by a polar bear.
Of course, the likely answer here (as Engadget acknowledges) is that Apple and AT&T have renegotiated the contract after that first deal—and it’s pretty clear that two have renegotiated at least once. Recall that in the case of the original iPhone, AT&T sold the handset entirely unsubsidized and dished Apple a cut of subscriber revenue. But, when the two partnered up again for the iPhone 3G,
they dropped the revenue sharing agreement and added subsidies to make the phones more affordable. Such a change in terms could require a new contract, or at least an amendment to the original document, so it’s not inconceivable that the length of the deal changed as well.
Given that Apple has released the iPhone 3GS since then, and is pretty likely to release
a new iPhone this summer, one lingering question is exactly how broad the agreements are: does the original deal cover every model of iPhone? Or must a new agreement be reached for each subsequent version?
Either way, all the court documents tell us is that upon the original iPhone’s release in 2007, Apple had signed a five-year exclusivity deal with AT&T. While that may be cold comfort to those
eagerly awaiting a Verizon iPhone, take heart: you’re technically no further from it today than you were yesterday—you’re just more confused.