Elektrobit is showing off its reference design for a multimode 3G and satellite handset phone at the CTIA Wireless I.T. and Entertainment show this week in San Francisco, and it’s a far cry from the clunky satellite phones of yore. It first unveiled the phone in April, during the larger CTIA Wireless show. At that time Elektrobit said TerreStar, a network that plans to operate a combined terrestrial and satellite network, would use the phone, but since Terrestar was experiencing financial and management problems, few industry watchers got excited.

However in the five months since, TerreStar has signed an agreement with AT&T that allows for seamless hand-offs between AT&T’s 3G network and TerreStar’s satellite network. So a truly worldwide 3G phone (AT&T operates a GSM network) is getting closer, although it still relies on TerreStar launching its satellite next year. The deal with AT&T has me thinking that TerreStar is focusing less on the terrestrial aspects of its planned satellite and terrestrial network, which would lower its costs of building out a network and possibly keep the satellite company in the game.