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AT&T has sacrificed a great deal for the benefits of its iPhone exclusive, in terms of margin and customer control, but that is not stopping it seeking to extend its deal until 2011.

The details of the agreement have always been carefully guarded, but it is thought to expire next year - and potentially earlier if AT&T does not hit sales targets, but unlike in some iPhone territories, this should not be a problem in the US, where the Apple handset has lured large numbers of customers to the operator and driven up data usage significantly.

AT&T is now reported to be negotiating for an extension to its exclusivity, though it remains to be seen whether it will manage to squeeze some improved terms out of Apple. The small print has already changed over the period of the relationship. In the original deal for the 2G handset, Apple gained a share of the revenue from each iPhone customer contract, but this was replaced at the 3G launch with a more conventional subsidy model. The scale of these subsidies has eaten into AT&T's margins - it pays up to $425 a unit - but this is balanced by the increased ARPU and loyalty of the Apple users.

The main bone of contention is likely to be the complete control that Apple has over the customer experience, particularly via its App Store. This has already reportedly led to the breakdown of talks with some operators in new territories such as China, where the carriers are determined to keep their brand visible and gain a stronger position in the mobile content revenue chain.

AT&T carries real weight with Apple as the US remains the iPhone's strongest market, but to partner with Verizon or Sprint would mean creating a new CDMA version - at least until Verizon's LTE network is widespread.

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