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Tense Apple-AT&T iPhone partnership nearly ended multiple times


A new report detailing the relationship between Apple and AT&T, the exclusive carrier of the iPhone in the U.S., reveals that Apple CEO Steve Jobs allegedly considered dropping AT&T numerous times, and considered leaving for Verizon as far back as 2007.

The tense relationship between Apple and AT&T is detailed in this month's issue of Wired magazine. Though the article is not yet available online, it was summarized Monday by Jason D. O'Grady of ZDNet.

The article compares the relationship between AT&T and Apple as a loveless celebrity marriage — one that went wrong quickly after the honeymoon ended. Apple was unwilling to restrict the Internet capabilities of the iPhone, while AT&T struggled to meet the overwhelming pressure the smartphone placed on its network.

An anonymous source told the magazine that Jobs discussed severing ties with AT&T at least a half-dozen times. At one point in 2007, Apple engineers allegedly visited the headquarters of Qualcomm to consider the prospect of creating a CDMA iPhone for the rival network. EVentually, the company concluded it would have to rebuild the phone from scratch to fit the new chips inside, making the prospect too costly and complicated.

The article also alleges that Qualcomm also began working on a chip that will allow the iPhone to work on both the AT&T and Verizon networks. Recent reports have alleged that Apple will offer a CDMA iPhone for the Verizon network in January 2011.

One of many spats between the companies was said to be regarding tethering: Apple wanted it to be included in the standard data plan charges, while AT&T wanted to charge extra. AT&T eventually won that alleged battle, as it now offers tethering via USB or Bluetooth for an extra $20 per month.

The report also said that AT&T took issue with the fact that the iPhone uses a radio from Infineon, a company that previously had been most widely used in Europe, where cell towers are more common. AT&T allegedly felt that Apple's use of an Infineon chip led to inferior reception. When the wireless carrier asked Apple to resolve the issues "together," it was said that Apple's response was, "No, you resolve them. They're not our problem. They're your problem."

The companies apparently squabbled over small things as well, as the two corporate cultures did not mesh well. At one point, an AT&T representative reportedly told one of Jobs' deputies that the company co-founder should wear a suit to meet with the AT&T Board of Directors. That AT&T employee was allegedly told, "We're Apple. We don't wear suits. We don't even own suits."