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Verizon Wireless passed on iPhone two years ago

Apple approached Verizon Wireless first about the iPhone, but Apple wanted too much control, according to a USA Today report.

Verizon Wireless could have been the first wireless carrier to offer the Apple iPhone, but the mobile carrier passed on the opportunity because Apple's financial terms were too steep, Verizon said Monday.

Denny Strigl, president and chief operating officer of Verizon Communications, said the iPhone will help draw attention to the whole mobile-music movement, but he said he was glad Verizon passed on the opportunity. Verizon Wireless is jointly owned by Verizon Communications and the European wireless carrier Vodafone.

"The iPhone product is something we are happy we aren't the first to market with," he said during Verizon Communications' fourth-quarter 2006 earnings call on Monday.

USA Today first reported Monday that Verizon Wireless had passed on the iPhone two years ago. One of the big sticking points for Verizon was the fact that Apple wanted control of the distribution of the product. Specifically, Apple only wanted to sell the iPhone through Verizon stores or the Apple retail stores, locking out other Verizon distributors such as Wal-Mart and Best Buy.

"We have great distribution partners nationally, regionally and locally," said Jeffrey Nelson, a spokesman for the company. "And the deal they (Apple) wanted would have frozen out those partners. So we said, 'No thanks, not under those conditions.'"

Apple also supposedly wanted a percentage of the service revenue from iPhone users, the USA Today article said. When Verizon declined Apple's offer, the iPod maker went to Cingular Wireless, now owned by AT&T.

Earlier this month, Apple announced that the new iPhone would be available on Cingular's network starting in June. The phone will come in two versions, a 4GB model for $499 and an 8GB model for $599. And even though Cingular and Apple each sell products through other retail chains, such as Best Buy, the iPhone will be sold exclusively through the Apple and Cingular stores as well as on their Web sites.

So far, neither Cingular nor Apple has disclosed financial details about the deal, such as how long the exclusivity contract will run.

Representatives from Cingular and Apple declined to comment on Verizon's claims that it had been approached first to sell the iPhone.

"Apple chose Cingular because it's the best, most popular carrier in the United States," said Natalie Kerris, a spokeswoman for Apple.