AT&T has unveiled their third quarter earnings, which among other things indicate the company added the most iPhones ever in a single quarter. According to AT&T, they activated 3.2 million iPhones during the third quarter, with forty percent of those customers new to AT&T. The data suggests that despite AT&T's network headaches, the lure of the device is simply too great for many to resist. iPhones represented 74% of the 4.3 million postpaid, integrated devices activated by AT&T last quarter as AT&T tries to extend their exclusive distribution arrangement with Apple.

More shiny new iPhones means more people paying $30 a month for data (whether they use that much data or not), and AT&T's wireless data revenues jumped 34% from last year's, to $3.6 billion. AT&T continues to see huge subscriber additions in wireless. The company added 2 million new subscribers to bring their wireless subscriber total to 81.6 million. Once lured in by the iPhone, many customers stay because of the iPhone (and long term contract ETF penalties), as AT&T continues to have the lowest customer defection rate in the industry.

On the U-Verse front, AT&T says they added 240,000 net U-verse customers, bringing their installed total U-Verse customer base to 1.8 million. According to AT&T, 90% of customers who order U-Verse TV also get broadband service. 60% of customers who order U-Verse TV also sign up for U-Verse VoIP service.

Of course AT&T's problem isn't wireless or U-Verse, it's their continued losses in traditional landline service. Landline revenues continued to drop, falling 7.1% to $16.3 billion from $17.6 billion one year ago. Those landline reductions will likely mean additional layoffs, according to engineers speaking anonymously to Broadband Reports. "A significant workforce reduction is coming and will be finalized by end of October," says one source, who says specific layoff numbers have not yet been revealed.