AT&T's second quarter earnings are out, and despite "antennagate" and network coverage criticism -- the company still managed to activate a whopping 3.2 million iPhones during the quarter. Overall, the company added 1.6 million wireless subscribers (896,000 of those were not phones but embedded devices like e-Readers) for the quarter, to reach 90.1 million total wireless connections. AT&T saw a 27.2 percent growth in wireless data revenues, up $936 million from last year -- and their new data pricing only really just kicked in.

AT&T added a net 209,000 U-verse TV subscribers for the quarter, totaling 2.5 million. That said, AT&T overall lost about 92,000 total broadband customers, given they lost 347,000 traditional DSL customers, some to U-Verse upgrades, some to competitors. AT&T's broadband quarter wasn't a particularly great one, something AT&T attributes to "seasonal" slowdown, but also because competitors in non U-Verse markets are becoming "more aggressive with promotions."

In other words, users tired of slow and expensive DSL service are upgrading to cable. AT&T hopes to counter this with bonded VDSL, which will extend U-Verse's reach to 30 million potential users. But the fact that cable is kicking AT&T around in legacy DSL markets is kind of amusing -- given all the investor pressure on AT&T to skimp on network upgrades. By lamenting telco network upgrades (be they FTTH or FTTN), Wall Street stock jocks like Craig Moffett wind up helping cable companies.

"To be honest we had expected virtually all of those customers to migrate down to a lower price point." -AT&T CFO on their new low wireless caps

On their earnings conference call, AT&T dribbled out a few interesting tidbits -- including the fact that their LTE trials will be starting in just a few months, with the service made available to AT&T customers sometime in 2011. The company also noted that they've been working hard to improve network performance in their trouble markets like New York City, where they claim dropped calls are down 23% in Manhattan while 3G speeds are up 31% the last six months. San Francisco upgrades are about 90 days behind NYC upgrades, says AT&T.

As for AT&T's decision to impose low 200 MB and 2 GB caps on wireless smartphone users during the quarter, AT&T's CFO Rick Lindner called the results "pretty encouraging." Interestingly, AT&T says fewer people than they expected downgraded from unlimited to 200MB and 2GB capped plans. "To be honest we had expected virtually all of those customers to migrate down to a lower price point." Perhaps because low caps and high overages (plus fees) isn't really a lower price point?

Regardless, AT&T acknowledged their new tiered pricing (which Verizon is expected to mimic later this month) "may reduce the growth rate in the next year." T-Mobile, Clearwire and Sprint certainly hope so.

Of course rumbling beneath all of this talk about wireless is AT&T's continued loss of traditional landline voice customers and associated revenues, which AT&T happily insists saw their "smallest year-over-year decline in five quarters." AT&T saw their wireline voice total (and they include U-Verse Voice in that total) drop to 44.3 million from 46.3 million on the quarter. Those continued losses mean continued layoffs at the company this year.