Apple Shouldn't 'Re-up' with AT&T

The Wall Street Journal is reporting on AT&T's negotiations with Apple to retain its exclusive deal beyond 2010 when it expires:

AT&T's exclusive deal to carry the iPhone in the U.S. expires next year, according to people familiar with the matter, and [AT&T CEO] Stephenson is now in discussions with Apple Inc. to get an extension until 2011 . . .

Keeping the iPhone away from rivals and finding the next hit devices, such as smart phones and multimedia handheld tablets, are among the challenges the 48-year-old CEO faces as he shifts AT&T's energy away from the crumbling U.S. landline phone business and into the wireless market, where technologies evolve quickly and hit products don't last long.

Apple is probably the more powerful party in these negotiations because it can say "no" -- and it should. Staying with AT&T would blunt the phone's growth and opportunity in the market. Rivals Android and BlackBerry have (or will have in the case of Android) multiple operator distribution. And while thousands of people have switched to AT&T to get the iPhone, thousands more who might buy it (like me) have not because of favorable deals with existing carriers and/or the pain of switching. 

The AT&T subsidy has been a critical part of the iPhone's success and it's not clear whether all cariers would equally subsidize the device if they got access to it. It's also unlikely that Apple would get a piece of the subscriber revenues the way it has with AT&T. But it is clear there's a larger market out there for the device if it breaks free of the exclusive relationship. 

There's a short term-long term calculation here and if Apple wants the iPhone to become a truly mainstream device --  the "iPod of smartphones" -- it must move beyond a single carrier relationship.