• Business Week, Thursday, July 12, 2007 12 PM

Apple's decision to sign a long-term iPhone partnership with AT&T was the best it could do, given the woeful state of the U.S. wireless industry, which is interesting. Consumer groups give AT&T giving low marks for customer service, and the Edge network, which the iPhone runs on, isn't even its fastest offering.

Apple was thinking ahead in choosing AT&T over Verizon Wireless, purveyor of the strongest nationwide wireless network. For starters, Verizon wouldn't cede control to Apple on crucial elements like hardware and software design. For another, the electronics maker was faced with the choice of embracing either the European-developed GSM standard used by AT&T and T-Mobile or Qualcomm's CDMA technology used by Verizon and Sprint-a no brainer. GSM is the standard used throughout Europe and Asia, allowing the iPhone to be sold in every country.

As for Apple's decision to use the slower 2G Edge network over AT&T's newer 3G Mobile Broadband network, it was a question of coverage and battery life. The Apple phone, already a "power hog," could also fall victim to "the dismal state of 3G service on GSM networks in the U.S." That said, Verizon and Sprint both offer faster, better 3G service, but given Apple's international ambitions--where widespread, under-utilized 3G networks are pervasive--its decisions make sense.

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