Investors can't make up their minds about AT&T's (T 1.17%) third quarter, and for good reason. This morning's coverage of the report teetered between celebratory and condemning.

For example, Reuters said the carrier badly missed estimates for postpaid net wireless additions, yet over at Barron's, the headlines spoke of an earnings beat and big iPhone activations. AT&T shares have bounced back and forth between a 1% bump and a 4.8% decline.

For clarity's sake, I think the best move is to report the numbers. I'll add some context at the end of this article, after which, I'd like to hear from you -- especially if you own shares. Ready? Here we go:

  • Total revenue declined 0.1% to $31.459 billion, below expectations. Wireless revenue improved 4.5% and data revenue grew 6.9%. Wireless service now accounts for 47.4% of revenue.
  • Per-share earnings rose 3.3% to $0.63. Wall Street had been calling for just $0.60 a share, according to data supplied by Yahoo! Finance.
  • Cash flow from operations for the nine months ending on Sept. 30 rose 6.6% year over year, thanks in part to a $2.9 billion shift in accounts payable and accrued liabilities.
  • AT&T ended the third quarter with 105.9 million total wireless subscribers, of which 69.8 million were postpaid. Total net adds fell 68.1% while postpaid net adds declined 52.7%, to 151,000. Total wireless churn rose 6 basis points; postpaid churn declined 7 basis points.
  • AT&T activated 4.7 million iPhones and reported "record sales" of Android and Windows smartphones. Total smartphone sales came in at 6.1 million during the quarter, leaving AT&T with 44.5 million postpaid smartphone customers -- roughly 64% of its installed base.
  • The company's U-verse interactive TV service grew 21.2% in Q3 and now boasts 4.3 million subscribers. AT&T serves 5.9 million total video connections.

Betting big on a wireless future
So what does the data add up to? I'm inclined to give AT&T a passing grade for two reasons. First, the carrier managed to activate significantly more iPhones than its closest rival, Verizon (VZ 2.85%), which managed to turn on 3.1 million. Big Red is growing faster but Ma Bell is keeping plenty of upgraders.

Which leads to my second reason: imagine what happens if the pattern holds. Apple (AAPL 0.64%) only introduced the iPhone 5 at the end of Q3. Upwards of 10 million new handsets could make their way to market. Existing smartphone customers could spend billions upgrading.

AT&T is preparing for the potential onslaught by rolling out additional access points for its high-speed LTE network ahead of schedule. More than 135 million are already in place. Verizon, for its part, has LTE in more than 400 cities. Big Red's highest-speed network is already responsible for serving 35% of user data, and the ratio is expected to climb to 50% soon.

And the verdict is...
Which brings us back to the question asked at the open: did AT&T win or lose this quarter? I'd say both: Postpaid additions came in light as iPhone activations and smartphone sales came in strong. But I'd also argue that, over the long term, these figures are likely to be meaningless.

AT&T is positioning itself for a much-higher-speed future where voice is an afterthought. My 7-year-old son put it brilliantly yesterday when he asked me if I had a phone. When I pulled out my 3GS he simply replied: "Oh no, you have an iPhone."

Translation: Silly dad, you have a handheld computer. You consume data, not voice.

Which, I suppose, is the point. AT&T, like Verizon, is a long-term play on our dependence on fast wireless to portable devices. Clearwire (NASDAQ: CLWR) had hoped to offer an acceptable substitute to these incumbents, but a heavy debt load has forced this would-be Breaker into the hands of Sprint, which is betting the technology can become a differentiator in the fight for iPhone business.

Of course, AT&T and Verizon are seeking the same advantage, which makes the process of picking a winner among the big three carriers all the more difficult. That's why our analysts have focused on wireless infrastructure suppliers. One company stands out as the key innovator in creating the new generation of data-hungry wireless devices. Do you know this disruptor? A new special report has the name and all of our analyst's research. Click here to get your copy instantly.