That's what essentially happens when a company who has as much clout and control as Apple does. Verizon said to Apple, "we want the iPhone on our network." Apple said "fine, but only on our terms."
I'm sure that Verizon wasn't exactly happy about that particular arrangement considering that Verizon has historically been a dictator when it comes to what is allowed on their network. But, I figure that they were losing too many customers what with all of the iSheep fleeing to other carriers to get the iPhone. Apple knew they had Verizon by the... well, you get the idea.