CHICAGO -- AT&T Inc. on Tuesday launched what it said is the first service letting callers share live video between cell phones.

The new AT&T Video Share service won't apply to the iPhone, which uses an older network. AT&T has an exclusive deal to offer service for the much-anticipated Apple Inc. device.

But the launch of the video service adds to the company's momentum as it gears up for the June 29 introduction of the iPhone, which it called a "game-changer" for the telecommunications industry.

Video Share initially was introduced in three markets -- Atlanta, Dallas and San Antonio -- and will be available elsewhere in late July.

It works only on the company's 3G, or third-generation, wireless network and requires a Video Share-capable phone, AT&T said. The company said it will offer Video Share service packs for $4.99 and $9.99 a month, depending on included minutes. Without a plan, the service costs 35 cents a minute.

New AT&T chairman and CEO Randall Stephenson told a telecommunications industry trade show in Chicago that the new service has the potential to expand rapidly beyond wireless-to-wireless.

"You should expect this to quickly reach the other two screens, and that's the PC and the television," he said at NXTcomm.

"Imagine watching television when a notice pops on the screen that a daughter or granddaughter would like to initiate a Video Share call, then immediately switching the television screen to accept the video and audio," Stephenson said. "With our powerful IP-based network and flexible IMS platform, these scenarios will eventually be reality."

Speaking just two weeks after taking the helm at San Antonio-based AT&T on June 3, he touted wireless as key to the future of the company and the industry, and said the migration from fixed service to wireless is accelerating.

AT&T hopes to benefit from that trend with the rollout of the iPhone. The combination cell phone, iPod and wireless Web device will be sold at stores owned by Apple and AT&T.

Stephenson said the company is "gearing up for this big-time," including adding hundreds of staffers at its 1,800 retail stores for the expected rush.

More than 1 million people have signed up for more information about the iPhone, he said, and nearly 40 percent of them are not AT&T Wireless customers.

"I really believe this is going to be a game-changer, not only for us but for the industry at large," he said.

Stephenson, formerly AT&T's chief operating officer, took over the top jobs following the retirement of Ed Whitacre Jr., who led the company for 17 years.

AT&T shares rose 11 cents to $24.62 in afternoon trading.