In the quarterly report that Verizon (VZ) issued Monday, the number that’s getting the most attention is 1.2 million.

That’s how many new wireless subscribers Verizon added over the past three months. And it’s being compared unfavorably with the 2 million that AT&T Mobility (T) gained in the same period.

Verizon, with a new total of 88.8 million subscribers, still has the largest wireless network — something its ads never tire of reminding us. But AT&T, with 81.6 million, is catching up, and there’s no mystery why. AT&T activated a record 3.2 million iPhones in the third quarter, nearly 40% of which belonged to customers new to AT&T.

Meanwhile, Verizon’s total churn rate is going up (from 1.33% last year to 1.49% this year) while AT&T’s is going down (from 1.69% to 1.43%).

But AT&T’s momentum may be short lived.

Complaints about AT&T’s spotty service and limited 3G coverage have not abated, and Verizon is starting to hit hard on those points in its TV ads. It’s also started running ads that attack the iPhone directly.

Moreover, Verizon is heading into a quarter in which it hopes to dazzle customers with new high-speed services and a barrage of new phones.

It’s scheduled to begin deploying a faster, so-called 4G network this fall; AT&T’s 4G rollout won’t begin until next year.

This quarter will also see the launch of Verizon’s first devices based on Google’s (GOOG) Android system, including a Motorola (MOT) “Droid” phone that is getting strong early reviews.

Verizon reported Monday that its revenue grew 10.2% in the third quarter to $27.27 billion while profits fell 9% to $2.89 billion  — results that were better than expected.

AT&T reported last week that its quarterly earnings had dropped 1.2% to $3.2 billion on revenue that dipped 1.6% to $30.86 billion. Revenue from AT&T’s wireless division, however, increased 8.2% and wireless profits grew 41%.

Asked in the earnings call about bringing the iPhone to Verizon, CEO Ivan Seidenberg deferred to Apple’s (AAPL). “This is a decision that is exclusively in Apple’s court,” he said. “Obviously we would be interested if they thought it would make sense for them to have us as a partner. And so we will leave it with them on that score.”

See also:

• What the iPhone did for AT&T
• Verizon and Google go after Apple
• Verizon vs. AT&T: There’s a map for that
• The Droid: Serious iPhone competition

[Follow Philip Elmer-DeWitt on Twitter @philiped]