AT&T; Video Phone Premieres

American Telephone & Telegraph Co. brought the 115-year-old telephone into the video age Monday with a new phone that lets callers see each other as they speak.

AT&T; said the VideoPhone 2500 is the first full-color, motion-picture video phone that works in any home. The video phone is the first such product on the market, beating out similar devices being developed by Japanese companies.

Consumers, however, will have to pay a lot of money to see the person on the other end of the line. The video phone costs $1,499 or can be rented for $30 a day--making it an upscale product largely for businesses or a rent-for-a-day item that people will likely use it for special occasions.

Wall Street viewed the product favorably. Compression Labs, a San Jose firm which invented the technology, closed up $2.625 at $28.875 on the NASDAQ over-the-counter market, while AT&T; gained 50 cents to $40.125 on the New York Stock Exchange.