When Apple started selling the iPhone last year, reports had it AT&T signed on as the exclusive carrier of the smartphone for anywhere from two to five years. The exact lengh of time is unknown, as both companies refused to discuss the agreement publicly.

Well, it appears AT&T and Apple are so happy with the arrangement, they've agreed to extend their exclusivity agreement. According to recent reports, the deal was set to expire at the start of 2009. It has now been extended by a year to 2010.

The hype surrounding the iPhone has helped to raise AT&T's status with consumers, according to an article in USA Today, helping the 120-year old brand become cool again - no small feat.

For years now, wireless carriers have known that they earn higher ARPU (average revenue per user) from smartphone users. As earnings from voice services aren’t cutting it anymore for their bottom lines, data has long been seen as the next great source earnings.

Operators tried to get consumers (not just mobile pros and enterprises) interested in tapping their phones for e-mail, Web access and other data services to little effect, however. That is, until the iPhone.

"Then Apple came along and, in a 30-second commercial, they just made it dead simple," accoridng to Forrester senior wireless analyst Charles Golvin in an interview with USA Today. Apple, along with its compadre AT&T, changed the smartphone landscape for everyone by showing it was possible to make data access not just easy, but fun and - most importantly (with the iPhone 3G) - fairly affordable as well.

By subsidizing each iPhone 3G sold by $300, AT&T is able to make the smartphone far more attractive to consumers. You can buy one for as little as $199. So while the carrier is losing money up front on the deal, it stands to more than make up for it over time as users shell out $30 per month (or more) for data access for at least two years after purchase.

AT&T CEO Randall Stephenson put it this way to USA Today: "The iPhone has repositioned AT&T as the premier wireless brand in the world. We're all about wireless."

During the first weekend of availability, Apple and AT&T sold 1 million iPhone 3Gs. And, perhaps even more importantly, the companies sold twice as many iPhone 3Gs during the first 12 days as they did of the original iPhone.