Why does the iPhone use Edge when ATT is offering 3G laptop cards!?

the g3 modem uses more battery power and is larger. If they did the phones battery would also be bigger making the phone much bigger.

Coverage & her demographics.

The purpose of the iPhone, as an Internet device, is Internet connectivity everywhere, no matter the speed.

The 3G network does not share the same scope of coverage EDGE does.

Contrary to what (jealous non-iPhone) people say, Apple knows what its doing.

It has quite a reputation to withold.

agree, plus I do believe that apple stated a future model of the iPhone will support 3g, probably in a year. Sigh...

For example, in Europe, the iPhone will be 3G because it is widely deployed. If you want to blame someone, blame yourself. Our collective apathy regarding our telecom infrastructure is exactly what give companies like AT&T; the power to sit back and do nothing.

Apple chose to go with edge because it fit the size and power constraints of the devuce they wanted to create...

Add onto that AT&T;'s uncomplete 3G network made it even easier for apple to make this decision.

With that being said iPhone 2.0 will most definatively have 3G out of the box...

There are no really satisfying answers to that question. Mobile devices are all about trade-offs. In this case, battery life & form factor won out over 3G. It's less than ideal, to be sure.

As noted, it was the availability and coverage area that prompted the decision.
FYI: The SIM card in the iPhone says 3G on it! I just wish they could have made it switchable the same way it can go between WiFi and EDGE... so that it would first choose available WiFi, then 3G, then go to EDGE as a last resort.