NEW YORK – The No. 3 U.S. mobile service Sprint Nextel Corp. (S) on Monday introduced a wireless music download service using phones from Samsung Electronics Co. Ltd. and Sanyo Electric Co. (SANYY).
Sprint Nextel (search) also said it expects a new high-speed data network it is building to have coverage for 130 million people by the middle of the month. The network can send e-mails and video at speeds similar to some home broadband networks.
Sprint Nextel and its bigger rivals Cingular Wireless (search) and Verizon Wireless (VZ) already sell phones that can store and play music that users transfer from their computers, but this is the first U.S. service that lets customers buy songs on the go.
Cingular Wireless and Verizon Wireless have said they plan to launch similar services next year.
The services are part of an industry-wide effort to boost revenue by getting customers to use their handsets for more than phone calls. Music is seen as one of the next big things in phones, most of which already sport cameras and Web browsers.
Sprint Nextel said it would send full songs to consumers' handsets for $2.50 each under the new service, two-and-a-half times Apple Computer Inc.'s 99-cent price for songs downloaded to computers through its popular iTunes (search) music service.
Consumers can also transfer the songs they buy through Sprint's service to as many as three personal computers by linking their phone to the computer with a cable.
While Sprint and its rivals believe consumers would pay a premium to buy music while on the move, many analysts have been skeptical about whether this would work.
Research group Ovum expects the U.S. wireless music download market to be worth $1.5 billion in five years, compared with $104 billion for the total U.S. mobile services market in 2004.
"Music could certainly be much bigger if pricing was more in line with what you find on the Internet," Ovum analyst Roger Entner said.
Sprint had said this summer that it planned to introduce a music service in time for the holiday shopping season.
It said on Monday it would offer the service, which uses software from privately-held Groove Mobile, on Sanyo's MM-9000 and Samsung's MM-A940.
The phones run on the high-speed network Sprint is building based on a technology known as EV-DO. It plans to expand the network to cover 150 million people, or half the U.S. population, by early 2006.
Verizon Wireless has been selling services based on this technology to consumers since February and to business users since 2003. Cingular plans to have a high-speed network in about 20 markets by year end.
Sprint said it would charge $15 to $25 a month for unlimited use of data services such as video and digital radio, with more video clips included in higher-priced plans. Verizon's high-speed service also starts at about $15 a month.
Cingular, a venture of SBC Communications Inc. and BellSouth, in September began selling a Motorola Inc. phone that runs Apple's music-playing iTunes software but the phone has met with a lukewarm reception.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.
Sprint shares were up 51 cents, or 2.2 percent, to $23.76 in midmorning trading on the New York Stock Exchange.