The Dow Jones Industrial Average (DJINDICES:^DJI) is trading sideways today. A couple of technology giants are leading the index this afternoon, but the Dow's two telecoms have slammed on the brakes. AT&T (NYSE:T) and Verizon (NYSE:VZ) are the Dow's worst performers today by a long shot, down 1.5% apiece.

So what's going on in the cellphone stores on Wall Street?

Neither AT&T nor Verizon did much to deserve a drubbing today. Or rather, they already unveiled the facts behind today's drop when they reported earnings over the last couple of weeks. The final catalyst comes from much smaller competitor T-Mobile US (NASDAQ:TMUS), which reported third-quarter results this morning -- and managed to outshine its larger American rivals for once.

Would you buy a smartphone from Catherine Zeta-Jones? You wouldn't be alone. Image source: T-Mobile.

T-Mobile added 1 million subscribers in the third quarter, including 650,000 of the high-margin postpaid variety. By comparison, Verizon added 927,000 postpaid customers but only 481,000 postpaid phone contracts, and AT&T signed up just 363,000 new postpaid subscribers overall.

Moreover, T-Mobile seems to be stealing some of the juiciest customers available: 88% of T-Mobile's phone sales were smartphones, compared to 67% for Verizon. AT&T is holding its own with an 89% smartphone sell-through penetration.

So T-Mobile isn't exactly kicking butt and taking names indiscriminately. The ex-German operator is beating Verizon in customer quality but not quantity, and it's the other way around versus AT&T. But it's clear that the small fry is getting some traction against the Verizon-AT&T de facto duopoly, and telecom investors are getting nervous.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool has a disclosure policy.

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