Verizon passes AT&T in wireless subscriber tally

— -- Verizon's revenue increased 11.6% to $26.6 billion. Net income rose 5.3%.

But wireless was the real standout. Verizon leapfrogged AT&T, which added 1.2 million subscribers in the quarter. Much of AT&T's growth was driven by the iPhone, which has proved resistant to the economic downturn.

AT&T, the No. 2 carrier with 78.2 million subscribers, currently has exclusive U.S. distribution rights for the device. But that could end next year if No. 1 Verizon, with 86 million customers, gets its way.

As reported by USA TODAY, Verizon and Apple are discussing the possible development of an iPhone for the New York-based telecom giant, with the goal of introducing it next year, people familiar with the situation say. Sources declined to be identified because they are not authorized to speak publicly.

A deal, if it goes forward, would mean that for the first time, Apple would produce an iPhone compatible with CDMA wireless technology. AT&T uses the global GSM wireless standard.

Apple declined to comment on whether it is talking with Verizon. In a prepared statement, Apple referred to its earnings call with investors last week, in which it reiterated that it has a good partnership with AT&T.

"We're very happy with the (AT&T) relationship that we have and do not have a plan to change it," COO Tim Cook told investors.

Even if it makes a deal with Verizon, Apple would likely continue its relationship with AT&T, says Roger Entner, head of telecom research for Nielsen. That way, he says, AT&T could continue to have an exclusive on the GSM model.

Globally, CDMA is in the process of being phased out. Big carriers, including Verizon, are switching to a fourth-generation wireless technology, LTE.

Verizon plans to begin rolling out LTE next year. CDMA won't go away, however. It will continue to be used nationwide to support the performance of the network.