Apple considered dropping AT&T as the exclusive carrier for the iPhone in the U.S. shortly after the first iPhone was released, according to a report from Wired magazine, and Apple CEO Steve Jobs has since discussed the issue, “at least half a dozen times.”
Citing unidentified sources within Apple and T&T, Wired said that Apple has been frustrated with AT&T’s approach to managing the increased data demands the iPhone has placed on the company’s network. For instance, AT&T came to Apple to request that the company limit the YouTube app that shipped on the iPhone, or to make other changes that would artificially limit the amount of data customers were consuming, but Apple refused to limit the customer experience.
On the other hand, AT&T execs have been frustrated with Apple for not being true partners when it came to managing the issues involved with carrying the iPhone. AT&T has also been frustrated with Apple for bugs in the baseband software that manages the way the iPhone communicates with the network, and for other design decisions in the iPhone that are better suited for European networks than AT&T’s U.S. network.
One AT&T source told Wired that his company would say to Apple, “‘Let’s resolve these issues together,’ and they’d say, ‘No, you resolve them. They’re not our problem. They’re your problem.’”
The article paints a picture of often acrimonious relations between the company, though a relationship that has left Apple getting its way more often than not. This is particularly important in that AT&T ceded unprecedented levels of control over the iPhone to Apple, control that a device manufacturer has never known in this market.
Therein lies an important changing dynamic brought about by smartphones in the U.S., where device manufacturers like Apple, Palm (now HP), and Google (via its own OEM vendors) want to make devices that customers want to use rather than devices that carriers want to carry. Apple’s success with the iPhone has already led to changes in the marketplace with Google and its Android licensees able to exert similar levels of control as AT&T’s competitors worried about losing customers to the iPhone juggernaut.
Another interesting anecdote presented by Wired centered around Apple’s Silicon Valley-oriented informality. An AT&T representative suggested to his Apple counterpart that Mr. Jobs wear a suit to meet with AT&T’s board of directors. Apple’s awesome response was, “We’re Apple. We don’t wear suits. We don’t even own suits.”
One other tidbit confirmed by the article was that Apple looked into moving to Verizon shortly after AT&T asked Apple to gimp the YouTube app. A team led by Scott Forstall determined that differences in the chips needed for use on Verizon’s networks would necessitate a complete redesign of the iPhone, a a process that was deemed impractical. Accordingly, Apple has remained married to AT&T, which has spent US$37.5 billion upgrading its network since the iPhone was released.
There is much more information in the full article at Wired.