U.S. phone company AT&T Inc. said on Wednesday it began marketing its AT&T Homezone, a long-awaited service that combines high-speed Internet and satellite television in one set-top box.

Homezone, which offers digital video recording, movies on demand, photo- and music-sharing, and Web-based remote access, is initially available in Ohio and San Antonio, Texas, ahead of a broader launch in coming months.

The new service comes as phone companies like AT&T and Verizon Communications Inc. launch various product bundles to compete against rival cable companies' all-in-one offerings of video, voice and Internet services.

Homezone is meant to be an alternative to AT&T's Web-based television service U-Verse, which runs on fiber optic networks, for customers who live in areas without fiber deployment, said AT&T spokesman Fletcher Cook.

AT&T has not announced any targets for Homezone sales.

It is aiming for 19 million U-Verse customers by 2008. U-Verse offers more capacity for quicker downloads with interactive capabilities, and is already available in San Antonio, where the company's headquarters are located.

AT&T's satellite TV partner is EchoStar Communications Corp.

Homezone will be available at various prices depending on features such as long-distance calling, channels and Internet speed. Bundled packages will cost around $80-$140 per month, versus the $70-$120 per month for the U-Verse bundle, a spokesman said.

Broadband AT&T