“So much bandwidth”? It was an edge device in a 3g world. It relied on Wi-Fi for location service when high end phones had used 3g towers and gps for years.
In so many ways the iPhone was a poor high end phone on paper.
OTOH the iPhone accessed the real HTTP Web not WAP and it didn't use a split browser architecture. For comparison, the Danger Hiptop/T-Mobile Sidekick was only allowed to have an unlimited data plan because all traffic from the phone went through proxy servers that compressed everything. AFAIK Blackberries also routed everything through a BES/BIS proxy.
In so many ways the iPhone was a poor high end phone on paper.