SAN FRANCISCO--AT&T is extending its relationship with online music service Napster to include over-the-air full-track music downloads, adding the final missing piece to AT&T’s comprehensive music strategy.

Built on Ericsson’s managed services platform, the new Napster service will go live next month, giving AT&T a full library of major-label and indie music to match the long-running offerings of rivals Verizon Wireless and Sprint. Unlike Sprint and VZW—which charge for all songs a la carte—Napster and AT&T are taking the odd approach of the bucket plan to the music service, similar to the way operators sell voice minutes or text messages. For $7.50 a month, customers get five DRM-protected tracks and can purchase additional songs individually for $2 each, receiving the track for the phone as well as the PC.

But AT&T did not say how extensively the service will be available—whether it would be available only over UMTS phones or whether customers are required to have a data plan to access it. AT&T is most likely to require the former but do away with the later. At $2 a pop, the Napster service would be the most expensive in the wireless industry if AT&T layers on data-plan charges. Both Sprint and VZW have lifted their requirement that customers shell out $15 a month for their EV-DO data services subscriptions when browsing and downloading business (though Sprint’s download fees are far cheaper if you do). As for UMTS, AT&T will probably insist on a 3G connection before initiating a download due to gruelingly slow speeds of the EDGE network. IAGR wireless analyst Roger Entner said the limitations of the EDGE network are the primary reason AT&T has been so slow to launch an OTA music service. Only now have its UMTS/High-Speed Downlink Packet Access (HSDPA) networks reached enough markets to make such an application feasible, he said.

“If you put an EDGE phone next to an EV-DO phone, there is no comparison,” Entner said. “By default, AT&T is already looking bad. Why go there? AT&T had to wait for the HSPA network to be ready before it could even think about doing over-the-air music downloads.”

But what AT&T wasn’t able to achieve in timing it is has made up for in diversity, Entner said, allowing customers a much wider array of music choices. The former king of peer-to-peer digital file trading, Napster has reshaped itself as a major distributor of rights-protected music with 5 million tracks from all of the major music labels. Couple Napster with AT&T’s previously announced agreement for OTA downloads with eMusic, which distributes 2.7 million digital tracks from independent labels, and AT&T has a large library. Sprint’s music store boasts 1.5 million songs, while VZW’s V Cast Music comes in at 2.1 million tracks.

But AT&T’s music offerings go beyond wireless downloads. AT&T has been working with Napster and Yahoo Music for a year, integrating its music phones with the two companies’ PC-based subscription music service, which allows customers unlimited access their entire libraries for as long as they pay their monthly bills. Finally the iPhone gives AT&T access to the hordes of iPod and iTunes fans.

AT&T has taken the view that it doesn’t need to create its own separate music brand like Sprint and Verizon Wireless; rather it will work with established brands like Apple and Napster. “AT&T will continue to offer separate services,” Entner said. “They don’t want to pick the champions. They want their customers to use whatever they use on their PC on their phones.”

Unveiling the Napster service at CTIA Wireless IT and Entertainment this week, AT&T pulled out all the stops, kicking off the service this evening with a live performance from Matchbox 20 and a new music video service provided called MobiVJ, powered by MobiTV.