Basically part of the reason Apple went with AT&T was they were the only carrier willing to let them control the user/feature layer of the stack.
The other telecoms would have this giant requirement document they dictated to handset manufacturers - which is why your crappy Motorola flip phone had three way calling buried 7 menus deep that nobody could use.
Things got magnitudes better when Apple leveraged their power to take away this control from telecoms. Though they still did agree to adhere to the minimum specs wrt safety/security.
The crappy Motorola rockr phone that Jobs hated is what happened when you tried to work with the telecoms.
This is what Apple claims, but what I heard back at AT&T was Apple demanded full payment for every sold device up front from AT&T, meanwhile every other vendor was providing multi-year financing.
AT&T had much worse commissions for selling iPhones than new lines for a reason. Meanwhile, Verizon, Sprint & T-Mobile played the long game and waited to sign volume commits and financing terms with Apple.
The carrier specific iPad financing promos where they sell you a tablet well below cost (even factoring in the 2 year data plan cost) is a situation created by these minimum volume commits.
Adding on: phone update 1.1.2 would be released from the phone vendor, with fixes for various bits. Carrier 1.1.2 would be released with undeletable spam apps and undeletable spam bookmarks.
We know this because both versions would end on XDA Developers.
