Sprint Nextel has scrapped its plans to sell a version of the Research In Motion PlayBook tablet for its high-speed wireless WiMax service after months of promising the device.

Sprint, the No. 3 U.S. mobile service, said on Friday that the cancellation of the cellular product was a mutual decision between Sprint and RIM. For its part, RIM said it has decided to prioritize product development around devices running Long Term Evolution (LTE), a rival to WiMax.

RIM said it is already testing LTE PlayBook models and plans to enter operator test labs in the United States and international markets this fall.

The top two U.S. wireless providers, Verizon Wireless and AT&T Inc, are building networks based on LTE.

Sprint, which depends on the WiMax network of Clearwire Corp for its high-speed offerings, is expected to announce LTE upgrade plans for its network in October.

Sprint still sells a version of the Playbook that connects to the Internet on Wi-Fi, a short-range wireless technology that is used in many homes and small public venues such as coffee shops.

The idea of connecting a tablet to a cellular network such as Sprint's WiMax service would be to allow for greater mobility than Wi-Fi can provide.

But Paget Alves, Sprint's head of business, said Wi-Fi tablets are much more popular today than tablets connecting to the cellular network such as Sprint's WiMax offering.

Right now the majority of tablets are Wi-Fi only, Alves told Reuters earlier this week. People use tablets in fixed locations.

In January RIM named Sprint Nextel as its first operator partner for the PlayBook, which is struggling to compete with the Apple Inc iPad tablet. RIM's April launch of PlayBook was met with lackluster reviews.

(Reporting by Sinead Carew in New York and Alastair Sharp in

Toronto ; Editing by Richard Chang)