ORLANDO, Florida (Reuters) - AT&T Inc. (NYSE:T - news) said on Tuesday it has taken a step toward the long-promised notion of phones replacing credit cards, checks and cash by signing agreements with Wachovia Corp. (NYSE:WB - news) and several other banks.

The agreements will allow customers of its Cingular Wireless arm, which is being rebranded as AT&T, and participating banks to manage their accounts and pay bills electronically by using an application on their cell phones. While the use of mobile phones for transactions is in its nascent stages in the United States, such services are already available in parts of Europe and Asia.In Japan, people commonly shop with their mobile phones by just waving their handset instead of swiping credit cards.

AT&T, having tested mobile banking last year, has said it will not charge extra for the service but expects it to attract more users to its wireless Internet service and potentially help it add new users and keep existing ones.Along with Wachovia, U.S. banks such as BancorpSouth Inc. (NYSE: BXS - news), Regions Financial Corp. (NYSE:RF - news) and SunTrust Banks Inc. (NYSE:STI - news) are offering mobile banking to AT&T customers. The move is part of an effort by wireless companies around to world to boost their revenue and customer loyalty by convincing subscribers to use phones for everything from Web browsing and text messaging to playing music and video.

AT&T said customers can download software from privately held Firethorn Holdings LLC onto their phones. AT&T plans to include the software in new handsets in the second half of this year and is planning a multimillion-dollar ad campaign.Firethorn is also acting as an intermediary between AT&T and the banks.

AT&T said most BancorpSouth customers who tried mobile banking said they would use it to check their balance, and about three quarters said it would help them make better spending decisions. Wachovia operates in 21 U.S. states, while Regions operates in 16 states in the Midwest and South, including Texas. SunTrust provides banking in Southeast and Mid-Atlantic states and BancorpSouth operates in eight U.S. states.

AT&T Chief Operating Officer Randall Stephenson talked about the mobile banking service in a keynote speech at the CTIA wireless technology conference on Tuesday. He also commented on combining wireless and fixed-line services. "I’m confident that in the not too distant future the concepts of having different handsets for different networks ….. will be seen as quaint," Stephenson said. For example, cell phone video conference services that AT&T plans to launch in 50 markets this summer could eventually work in conjunction with video conferencing on television screens and desktop computers."You should fully expect in a very short period that the other two screens will be brought into this," said Stephenson. He saw mobile video representing as dramatic a change as the replacement of black-and-white televisions with color. To illustrate the growing ubiquity of mobile phones around the world, Stephenson said that while four babies are born every second in China, about 25 people are signing up for wireless services in the country.

Current discussions focus on a potential mobile phone deal with AT&T’s mobile unit, Cingular, the largest U.S. cellphone company, where Yahoo would provide advertising, Web search and other services along the lines of the contract Yahoo struck late last year to act as exclusive provider of advertising for Vodafone mobile phone customers in Britain, the source said. "It is pretty obvious that the next new thing is mobile services and advertising," the source said.

In a joint statement issued on Friday afternoon, AT&T and Yahoo said Yahoo also would be providing services on AT&T’s Internet television service later this year. "AT&T and Yahoo have already made adjustments over the years to reflect competitive conditions and the relative benefits each party brings to the relationship," Yahoo Chairman and Chief Executive Terry Semel said. "As we continue our conversations, we have a common goal to increase the economic benefits for both parties."

Goldman Sachs analyst Anthony Noto estimated the AT&T deal provides Yahoo with $210 million to $290 million per year in subscription and advertising revenues. Doubts raised by the report came as an unexpected blow to Yahoo, which has been rebounding from a series of business missteps that caused shares to lose 35 percent last year.

Ahead of the Journal report, Yahoo shares had risen around 13 percent head in the year to date. Investors are betting on stronger growth this year and next, following a major upgrade of its Web search advertising system last month. Yahoo spokesman Mark Plungy labeled the Journal story "rumor and speculation" and confirmed talks continue. "AT&T and Yahoo’s ongoing partnership is rooted in the open and ongoing dialogue we maintain about future opportunities," he said. The two partners introduced advertising on the front page of their joint broadband marketing site earlier this year.

Later this month, Plungy said, Yahoo is introducing advertising on their co-branded e-mail service for high-speed customers. Further mobile ties remain under negotiation. "We are discussing ways to expand our partnership in the mobile arena, now that AT&T has 100 percent ownership of Cingular," he said. Yahoo shares closed down 5.2 percent at $29.12 on Nasdaq. AT&T closed up 4 cents, or 0.1 percent, at $36.55 on the

New York Stock Exchange.

AT&T, formerly known as SBC Communications, struck a broadband marketing partnership in 2001 in which SBC pays Yahoo a small cut for each high-speed Internet access customer in return for Yahoo building and managing Web services for customers. The deal covers AT&T customers in the 13 states where the top U.S. phone company offers local phone service.

Yahoo has similar broadband deals with major phone companies Verizon Communications (NYSE:VZ - news) and BT Group Plc (BT.L) and Canadian cable Rogers Communications (Toronto:RCIB.TO - news).  The Wall Street Journal highlighted how rivals Google Inc. (Nasdaq:GOOG - news) or Microsoft Corp. (Nasdaq:MSFT - news) in the past year have struck a series of high-profile deals where they pay major computer and media companies for the privilege of marketing services to their partners’ customers, reversing the trend of five years ago when AT&T and others agreed to pay Yahoo. "Yahoo is likely in jeopardy of losing its AT&T deal, or at least a reworking of the deal that could materially scale back the relationship," analyst Scott Devitt of broker Stifel Nicolaus warned in a research note to clients issued Friday.

But the source close to the talks said the existing broadband contract includes a provision that AT&T customers who have signed up for the service would remain Yahoo customers for ads and Web services, whether or not AT&T chooses to renew.  Hence, the risk to existing revenue streams is low. Furthermore, Yahoo and AT&T are already focused on new areas such as mobile and TV partnerships as broadband use has become more widespread and growth in new customers has peaked.

NEW YORK — Verizon Wireless, the No. 2 U.S. cellphone carrier, passed on the chance to be the exclusive distributor of the iPhone almost two years ago, balking at Apple’s rich financial terms and other demands.

Among other things, Apple wanted a percentage of the monthly cellphone fees, say over how and where iPhones could be sold and control of the relationship with iPhone customers, said Jim Gerace, a Verizon Wireless vice president. “We said no. We have nothing bad to say about the Apple iPhone. We just couldn’t reach a deal that was mutually beneficial.”

Verizon’s decision to pull the plug on talks sent Apple into the waiting arms of Cingular, which will be the exclusive U.S. carrier for the iPhone. The multifunction device is expected to ship in June and cost about $500. Apple and Cingular (which now is solely owned by AT&T and adopting that brand name) have declined to discuss terms of their alliance. But the Apple-Verizon talks offer a peek into the computer giant’s thinking. According to Verizon, Apple CEO Steve Jobs insisted that he have hard control over iPhone distribution.

The problem? While Apple and Verizon stores would have it, Wal-Mart, Best Buy and other Verizon distributors could have been left out. “That would have put our own distribution partners at a disadvantage” to Apple and Verizon stores, Gerace said. Customer care was another hitch: If an iPhone went haywire, Apple wanted sole discretion over whether to replace or repair the phone. “They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support,” Gerace says.

Cingular won’t talk about the financial terms or say how long its iPhone exclusivity lasts, but two people with direct knowledge of the deal say it’s a five-year contract. The exclusive is USA-only, leaving Apple free to market its iPhone globally. Natalie Kerris, an Apple spokeswoman, declined to comment on any aspect of this story. Mark Siegel, a Cingular spokesman, said, “We think this is a win for Apple, and it is a win for Cingular.”

Siegel declined to comment on customer care plans but said Cingular would field calls related to the wireless service. “I don’t want to leave the impression that these (iPhone) customers are not ours. They are.” Siegel would not say whether Cingular distributors, which include Wal-Mart and RadioShack, would get the iPhone. The deal announcement referred only to Cingular and Apple stores and their websites.