The device would be the first iPhone developed for a code division multiple access wireless network, which allows phones to maintain their independence while operating on the same bandwidth. The AT&T system uses a GSM (global system for mobile) system, USA Today reported Monday.
Vodafone, co-owner of Verizon Wireless, already sells iPhones for Apple to the European market, the newspaper said.
Sources said the goal was to introduce the CDMA phones into the U.S. market next year. AT&T, meanwhile, has exclusive distribution rights in the United States through 2010, but details of that agreement are not public.
."Breaking the exclusivity with AT&T is a huge thing," said Roger Entner, a telecommunications research specialist at Nielsen.
"That would send shivers into AT&T's stock and senior leadership," he said.
With 80 million customers, Verizon, however, could be a big boost to Apple. But customers would also gain, Entner said.
"They could pick the network they wanted to use: AT&T's or Verizon's," he said. "It would finally give consumers choice, and choice is a good thing."