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Cell phone video start-up files for IPO

PacketVideo is on the leading edge of an industry scrambling to figure out what types of Internet services will work in the wireless world.

Dick Tracy readers know where the future is: It's a wireless videophone for those quick calls to headquarters, right there on your wristwatch.

That's essentially the idea behind a San Diego, Calif., start-up called PacketVideo, which produces software allowing two-way video conversations or Internet video content to be delivered over mobile telephones and other wireless handheld devices. The company filed to go public this week.

The idea of video delivered over wireless devices, however appealing, is ahead of its time. Most of today's mobile phone Net surfing is limited to a few lines of text at a time, hampered by slow networks and the barely adequate screen quality of current devices.

But PacketVideo, aiming at becoming the RealNetworks of the wireless world, has nevertheless attracted the interest and financial support of heavy hitters such as Intel, Siemens, Time Warner and Phillips.

Optimistic analysts say the demand for video service will develop when network speeds and devices can support the technology.

"I think anyone who travels for business would be willing to pay a dollar a minute or so to talk to their kids at night," said Iain Gillot, an industry analyst with the International Data Corporation. "This could negate a lot of voice communication."

PacketVideo is on the leading edge of an industry scrambling to figure out what types of Internet services will work in the wireless world. "Wireless Web" access services are now rudimentary, giving subscribers access largely to quick bursts of information such as stock quotes, weather reports or news stories.

But over the next few years, a new generation of telephones and network technology will increase the speed of mobile downloads from molasses-slow dial-up speeds to the point where they will rival cable modems and today's high-speed telephone lines.

That opens up the possibility of offering genuine multimedia services such as video or music, and companies from Time Warner to Qualcomm are looking at ways they can tap into those revenue streams.

PacketVideo isn't the only company aiming at bringing video to the cell phone world. Several of the big phone manufacturers and operators already have prototypes of videophones that use different technology.

Britain's Orange mobile carrier has offered a videophone service, using an initially clumsy device one analyst dubbed "a Palm with a video camera strapped to its side," and Nokia has shown analysts prototypes of a slightly more elegant video device.

Microsoft, which is even now making new gains in capturing the Web video market, has also said it plans to put multimedia capabilities inside its Windows CE operating system.

PacketVideo does have one advantage, however. Its services are already available and being tested by several big cellular phone companies. It also has a signed contract with Intel to include its technology inside the chipmaker's mobile phone products.

The company's executives have been showing the service at recent trade shows, with mixed results. The video quality is still poor, displaying about 5 frames a second, making it even jerkier than the marginal quality of current Web-based video.

But the fact that video can be shown on a Sprint PCS cell phone at all has captured some industry imaginations. Warner Bros., Sony Pictures Entertainment, CNBC, and Atom Films, among others, have signed up to try out the service with their programming. The company is gearing its technology for these providers' content at first, and will let the market determine what exactly it is used for, executives say.

"We don't have a crystal ball," said PacketVideo chief executive Jim Carol. "We're building the enabling technology, and that will be deployed."

PacketVideo even has its own programming division, headed by the former senior vice president of digital entertainment at Columbia TriStar Television.

For those ambitions to be realized, the cell phone operators need to adopt the technology, however. And that's still happening slowly.

US West and Finland's Sonera are testing the technology in their laboratories. Others say they are looking at video technologies, but the time isn't yet ripe.

"It is one of the likely future applications," said Tom Murphy, a spokesman for Sprint PCS. "But what's on it, and what (software) is doing it--that's going to be based on our experience with how people use the wireless Web."

Analysts say the mobile phone networks, which are still designed for voice, will need time-consuming, expensive upgrades before they can handle genuine video communications.

"Today's networks cannot handle video," said Jane Zweig, vice president of wireless consulting firm Herschel Shosteck Associates. "You can have the best devices in the world, but if the networks aren't there, then even the best devices won't deliver."