• by Mark Walsh  @markfwal, February 8, 2011

With an estimated 500,000 pre-ordersfor the Verizon iPhone sold in one day last week, there is ample pent-up demand for the Apple device on Verizon's network. But an issue hovering over the wider debut of the iPhone 4 in 2,000 Verizon retail stores nationwide on Thursday is what happens if an iPhone 5 comes out this summer, as recent history would suggest?

That's what Consumer's Union asked in a letter sent Monday to Verizon, asking for clarification of its upgrade policy concerning people who buy the iPhone 4 now, five months before the next-generation model is released.

Among the questions the nonprofit publisher of Consumer Reports posed, in the letter sent to Verizon president and CEO Daniel S. Mead by CU's Policy Counsel Parul P. Desai, were:

*Will customers receive a rebate or some type of discount towards purchasing the new iPhone model?

*Will customers wanting to replace the iPhone 4 with the iPhone 5 be in violation of their two-year contract commitment and thus subject to an early termination fee of $350?

*Will customers face any other costs, penalties, or obstacles for upgrading to an iPhone 5?

Consumers Union asked Verizon to provide "transparent answers to these questions" before Thursday, when the Verizon iPhone goes on sale widely. Verizon did not respond to a media enquiry sent Tuesday about the letter. As it stands, it would appear that anyone who signs a two-year contract for an iPhone 4 from Verizon would have to pay the $350 ETF for ending their contract early to get the iPhone 5, expected to be introduced in July.

People also have the option of paying Verizon the full retail price of $650 for the 16-gigabyte version of the iPhone 4 or $750 for the 32-gigabyte model without a contract.

In connection with the iPhone launch, Verizon is heavily promoting a trade-in program letting wireless users trade in a smartphone in good condition in return for a Verizon Wireless gift card worth more than $200. It's also touting a new "Special Upgrade Offer" that allows existing customers to trade in a smartphone they have recently purchased for a Visa debit card worth $200. Only subscribers who bought a phone between Nov. 26, 2010 and Jan. 10, 2011 are eligible.

Wall Street analysts expect Verizon to sell 11 million iPhones this year. Apple last month said it sold 16.2 million iPhones in its 2010 fiscal year ended Dec. 25, prior to the partnership with Verizon.