T-Mobile's HTC G1 is the first Android-powered handset. It features a touch screen, full QWERTY keyboard, 3G connectivity, GPS, and Wi-Fi.
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T-Mobile USA had a mixed third financial quarter, as the fourth-largest U.S. carrier saw increased service revenue, but the company had a harder time holding on to customers.

T-Mobile, which is a subsidiary of Deutsche Telekom AG, reported its revenue rose to $5.51 billion, an increase of 13% from the same time last year. The fourth-largest U.S. wireless carrier reported net income of $442 million, down from $526 million a year ago.

The company added 670,000 new subscribers, but nearly 65% of those were on prepaid plans. While adding subscribers is always good, the average revenue per user of a prepaid customer is about $24, compared with about $52 for those on a contract. Overall, the mobile operator had 32.1 million subscribers.

T-Mobile saw its customer defection rate, or "churn," increase to 2.4%, up from 2% in the third quarter of last year. The fourth largest U.S. wireless carrier attributed this primarily to competitive pressure and many of its customers hitting the end of their contracts.

The company is behind AT&T, Sprint, and Verizon wireless in terms of 3G coverage, but T-Mobile is rapidly expanding its UMTS/HSDPA network and expects it be in 27 markets by the end of the year. The expansion seems to be paying off as data service revenue has risen to $850 million, a 28% increase from last year.

"T-Mobile USA continues to be one of the strong growth drivers for Deutsche Telekom," said Rene Obermann, Deutsche Telekom's CEO, in a statement. "With the introduction of its 3G network in the United States and the launch of the T-Mobile G1 with Google, T-Mobile USA is now in an excellent position to further leverage the enormous potential of mobile data in its market."

The wireless carrier has been making aggressive moves in acquiring and retaining customers over the last few months with new services and handsets. In June, the mobile operator challenged traditional telecoms, cable companies, and VoIP providers like Vonage with a $10 unlimited home phone calling plan for existing T-Mobile subscribers.

The conventional wisdom has been that T-Mobile provides excellent customer service but lags behind its competitors with exclusive cutting-edge handsets. Part of that seems to be changing as the company is the exclusive provider of the Android-powered G1 and the first clamshell BlackBerry, and it soon plans to roll out the Motozine ZN5 and the Samsung Behold.