RealNetworks switches on video for AT&T

The Seattle-based digital media services company is expected to provide the infrastructure to deliver streaming video to AT&T Wireless cellular service subscribers in the United States, sources familiar with the plans said.

AT&T Wireless has more than 22 million U.S. cell phone subscribers, and it is a prime candidate to offer new streaming video and audio services in the wireless market. It is developing a next-generation cell phone network in the United States with the backing of Japan's NTT DoCoMo, which holds a 17 percent stake in the carrier. In Japan, DoCoMo is considered a pioneer in delivering streaming video and audio to wireless service customers.

The deal will give RealNetworks another large partner in the mobile market. In October, it teamed with Motorola, which is building the RealOne Player into certain handsets scheduled for release early next year.

In addition, RealNetworks introduced a streaming media subscription package in August for Sprint's 2.1 million PCS users and was chosen by Vodaphone this summer to deliver audio and video on its mobile phones. Nokia has also expanded its agreement with RealNetworks for next-generation cell phones.

RealNetworks has earmarked the wireless market as a key area for growth. The market is important because the company can reach a new set of subscribers for its RealOne audio-video entertainment service and can sell the back-end infrastructure to deliver that service. It is especially crucial for system sales, because RealNetworks has seen its share of the market for PC-based technology dwindle, a result of Microsoft's ability to promote its Windows Media through its operating system dominance.

"We expect that AT&T Wireless will be the next feather in (RealNetworks') cap," said Richard Doherty, president of Envisioneering Group, an Internet research firm.

RealNetworks declined to comment for this story.

Doherty said that AT&T likely opted for RealNetworks for its "under-the-hood" technology, which allows services such as video conferencing or streaming entertainment to be delivered via cell phone. That technology includes a back-end system of media servers and the digital rights management software needed to protect the security of content as it travels to a wireless phone.

Wireless is becoming more important for companies like RealNetworks, especially as many wired phone lines are being disconnected in favor of cell phones, Doherty said.

However, video services demand more wireless bandwidth than cell phone carriers have been able to deliver. But AT&T recently flipped the switch on a new wireless Internet network that it claims is the fastest in the United States. It did this by using a cell phone standard called EDGE, or Enhanced Data Rates for GSM Evolution.