Countless friends and business associates are interested in getting an iPhone but don't want to use the AT&T network. In fact when giving people advice on phones to purchase - if I do mention the iPhone I always have to warn them of the AT&T network. Regardless of AT&T's marketing regarding more bars in more places and the best coverage in the world, the AT&T Wireless network is simply not as good as Verizon Wireless.
Verizon knows this and keeps investing in its network to make sure it doesn't fall behind.
In fact if AT&T didn't have exclusivity on the iPhone I predict we would have seen massive churn to Verizon.
This would explain why AT&T is trying to extend its contract with Apple to 2011. But really, if AT&T is smart it will pay whatever Apple wants for exclusive (or at least preferred) rights to interconnect Apple TV and every other Apple device coming in the future. At this rate, Apple will soon own our living rooms and AT&T can leverage its Apple relationship to sell its broadband services which could integrate with Apple services more effectively.