Qualcomm hopes to boost demand for its chips and for high-speed mobile phones by transmitting content such as live news or sports clips and selling it through existing U.S. mobile service providers.

The network will be built by Qualcomm's MediaFlo USA Inc. subsidiary. Paul Jacobs, president of Qualcomm's wireless Internet group, said the new network would enhance existing services by letting operators deliver video services without using up capacity needed for mobile phone calls.

"(Operators) understand it's a very low risk strategy to complement their network," Jacobs said in a telephone interview. Qualcomm is talking to several operators, handset makers and media companies, he said. It plans to launch the service in 2006.

Sprint Corp., which already provides an early stage video service to its customers, had no immediate comment on the Qualcomm service. Verizon Wireless (VOD.L) spokesman Jeff Nelson said Verizon would look at the service.

U.S. mobile providers are spending billions of dollars upgrading their own networks for the delivery of advanced services such as mobile Internet and video to help offset falling phone call prices. Such services have seen some success in Asia but remain in their infancy in the United States.

Deutsche Bank analyst Brian Modoff said Qualcomm's investment was a "drop in the ocean" for the company, which had about $2 billion cash at the end of July, but still poses some risks.

"This is a conduit to try to drive demand . Mobile data is the next big thing in wireless but its success is still unproven," Modoff said.

Qualcomm's shares closed down $1.04, or 2.5 percent, at $40.56, reflecting investor nervousness about its quarterly earnings to be released on Wednesday and reactions to the network plans.

Qualcomm, which eventually plans to spin off the MediaFlo subsidiary, has had a number of inquiries from potential outside investors but has not decided if it will take third-party investments, Jacobs said.

The network will cost far less to build than a standard mobile phone network because a market that requires hundreds of towers to provide mobile voice services would only need about two to three transmission towers, he said.

This means that operators should be able to sell the services at a low enough price to attract wide usage, he said.

Qualcomm is still working out what types of content it will offer but is considering everything from entertainment and breaking news services to sending data alerts to investors when a stock they are interested in is mentioned on television.

Because space on the network will be limited, Qualcomm expects to offer the same content to all of its customers but it will also discuss renting dedicated space to service providers, according to Jacobs.

"There will be ways for them to combine this network with their existing network to drive additional traffic," Jacobs said.