Verizon rejected Apple iPhone deal
Verizon Wireless rejected Apple's offer to carry the iPhone exclusively due to Apple's terms.
Apparently, Apple demanded "a percentage of the monthly cellphone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers."
Part of the deal included limited distribution to Apple Retail Stores and Verizon stores only. Such a deal would leave discount retailers like Circuit City (who is Verizon Only in most locations) Wal-Mart, Best Buy, and other Verizon distributors out. The Cingular deal is exclusive to Apple Retail Stores and Cingular corporate stores leaving out independent Apple dealers and Independent Cell Phone and Service Centers - supposedly to insure contract sign up.
Apple also wanted "sole discretion over whether to replace or repair the phone" with regard to customer service.
Cingular representatives have refused to provide the details of their agreement, but according to USA Today, the exclusive Cingular deal is a 5 year contract.
Apple's entry in to the cell phone market was predicted to shake up the existing dynamics of the cell phone industry. Indeed, Apple appears to have made unique demands of cell phone carriers.
It appears that there might have been some credence to Kevin Rose's initial rumor that the iPhone would be available on multiple carriers. I can confirm as well, that some prototypes were being used on CDMA networks.
Kevin, who, to his credit, accurately predicted one of Apple's most secretive and hyped launches of 2005, the iPod nano, said the iPhone will feature the following:
January launch on "all" providers, both CDMA and GSM
Extremely small form factor
Two battery design (with single charger) -- one for playing music, the other for phone functions
Flash memory: 4GB for $249, 8GB for $449
~ quoted from Engadget
I think this also lends credence to the rumor/prospect that Apple was going to be an MVNO (Mobile Virtual Network Operator). I would imagine that negotiations were very difficult with all of the cell carriers. Thusly, Apple probably considered leasing time from one Operator and just handling the entire process of the iPhone on their own.