• by Mark Walsh  @markfwal, October 26, 2009

Verizon Communications had a nearly 30% drop in third-quarter earnings as AT&T and the iPhone ate into the telecom giant's wireless growth. Verizon Wireless added 1.2 million customers during the quarter (for a total of $89 million) compared to 2.1 million a year ago, underscoring the company's lack of hot phones to rival the iPhone.

In contrast, AT&T last week reported adding 2 million customers in the third quarter and activating 3.2 million iPhones.

Verizon overall posted a profit of $1.18 billion, or 41 cents a share -- down from $1.67 billion, or 59 cents a share, a year earlier. Revenue rose 10% to $27.27 billion, slightly ahead of analyst expectations.

Wireless revenue increased 24% to $15.8 billion, although the average revenue per user fell 2.2% from a year ago. Nearly one-third (30.5%) of the company's wireless revenue now comes from data charges, up from 25.1% in the third quarter of 2008.

Despite its ad for the forthcoming Droid phone attacking the iPhone, Verizon CEO Ivan Seidenberg did not rule out a potential partnership between the company and Apple. "We would be interested at some point in the future and they have thought it would be interesting to have us as a partner," he said during the company's conference call with analysts, without providing further detail.

In the meantime, Verizon plans to release a dozen more devices in the fourth quarter including the Android-based Droid, the BlackBerry Storm 2 and a sequel to the BlackBerry Curve. It will also offer the Palm Pre early next year.

In addition to AT&T and its exclusive deal for the iPhone, Verizon is also feeling pressure from competitors focused on price. T-Mobile USA Monday introduced a pair of new pricing plans: a no-contract Even More Plus plan offering a full unlimited service package for $79.99, and an Even More option, requiring a two-year contract for a subsidized phone and unlimited voice, texting and data for $99.99.

However, Verizon's Chief Financial Officer John Killian told The Wall Street Journal the T-Mobile price cuts were less than anticipated and said there was little need to react to the changes. Even so, it would not be surprising to see Verizon and other carriers at some point roll out new pricing plans in response to T-Mobile to stay competitive in a weak economy.

Last year, all of the major carriers announced $99 unlimited calling plans at about the same time. Sprint and T-Mobile have been most aggressive on pushing down pricing, however. Sprint's Simply Everything plan offers full unlimited services for the same price for $99.99, while its prepaid Boost Mobile service offers unlimited "talk, text, Web and walkie-talkie" for $50 monthly.

Sprint also recently upped the ante through its Any Mobile Any Time plan, providing unlimited mobile-to-mobile calling to any U.S. wireless number on any network at any time.