Apple and AT&T playing favorites with the App Store?

Correction at 7:20 a.m. PDT: Mark Siegel is a spokesman for AT&T mobility.

Just under a year since first announced, the SlingPlayer Mobile application is finally available for the iPhone. But compared with the capabilities of the same application available on other smartphone platforms, the iPhone version of SlingPlayer is curiously handicapped.

The version set to arrive Wednesday costs $30, and can stream a TV signal from a set connected to a Slingbox to the iPhone. But this version is available using Wi-Fi only. It's notable because the beta version of the application was demonstrated at CES using the iPhone's 3G connection. So why is it turned off in the official release? Recent changes in the terms of service that comes with AT&T's iPhone wireless service may offer some clues.

Apple rejected the original version of the application Sling submitted to the App Store that required use of the phone's 3G service, according to Sling. It was subsequently approved when it was modified so that it will just use local Wi-Fi hot spots. Apple's exact reason for rejecting it isn't clear. There are plenty of video- and audio-streaming applications available today in Apple's App Store, from smaller streaming services like Orb and Last.fm (owned by CNET News publisher CBS Interactive), and heavyweights like MLB.com's At Bat, CBS' TV.com, and YouTube.

While Apple has certainly not been shy about exercising its veto power over App Store applications--just ask Trent Reznor, for example--it's unclear why Sling's streaming video service is being treated differently from, say, the YouTube app (owned by Apple-friendly Google), which has been available on the iPhone since the device's launch.

Apple did not respond to requests for comment about why only the Wi-Fi version of SlingPlayer was approved. But it appears the rejection also could have been at AT&T's behest. Early in April, AT&T changed its terms of service for wireless customers, saying that redirecting TV video or audio signals--as the SlingPlayer does--was no longer allowed on its network. After a public outcry, AT&T quickly reversed its decision, citing "a mistake." But then last week the company reinstated the ban in its TOS.

Then on Friday, AT&T mobility spokesman Mark Siegel went on the Clark Howard radio show and very clearly said that "Slinging"--the process of accessing a TV signal from a Slingbox from a remote computer--was banned on the company's network.

Siegel compared using Sling's service over a wireless connection to sending bulk e-mail and spam, activities that he said eat up too much of the network's bandwidth. "You can't use a service called 'Slinging,' where you redirect a wireless TV signal to your phone. We do not allow that type of application on our phones," he said. "It's absolutely cool (technology), but if we allowed these kinds of services, the highway would quickly become clogged."

He confirmed again to CNET News on Tuesday that AT&T believes the SlingPlayer app would take up more bandwidth than it should. To be fair AT&T does have a valid point. Streaming video eats up a lot of bandwidth. Because cellular networks are divided into cells, users in a particular cell share the available bandwidth in that cell or region. So users streaming a lot of high-quality video over the network could potentially eat up all the available bandwidth and degrade service for other subscribers in that cell.

But there's a slight disconnect in what AT&T is saying and what it is doing: Other 3G smartphones that operate on AT&T's network can use the SlingPlayer. For example, the SlingPlayer works on several BlackBerry devices, the BlackBerry Bold, BlackBerry Pearl 8120, BlackBerry Curve 8320, and the BlackBerry 8820. Users are able to download the mobile SlingPlayer application directly from the Sling Media Web site onto their phones.

Siegel says that AT&T's terms of use are clear when it comes to the SlingPlayer and he suggests that anyone downloading these applications onto a smartphone for use over its 3G network is in violation of the company's terms of use.

Bandwidth usage is a legitimate concern when it comes to SlingPlayer. The software is designed to provide the best quality video experience based on how much bandwidth is available. But Dave Eyler, product manager for mobile at Sling Media, said that the latest version of the SlingPlayer submitted to Apple for the App Store capped the bit rate to ensure it was below Apple's and AT&T's threshold. He said that the application actually uses a little less bandwidth than TV.com's application.

"Our latest application, which was submitted for App Store, is under the bit rate that Apple has set for these kinds of applications," he said. "And we are below some of the apps that have already been approved for the App Store."

So why won't Apple allow the SlingPlayer for the iPhone to be used over AT&T's network if it doesn't eat up any more bandwidth than other video applications that have already been approved by Apple?

That's a good question. Eyler said the explanation given to his team was that AT&T doesn't allow video services that redirect TV signals onto their network. But interestingly, OrbLive, which is offered on the App Store, also redirects TV signals onto the iPhone. The application is designed to allow people to stream media from a PC to the iPhone wirelessly. And the company's web site explicitly states that live TV can be streamed over 3G, Wi-Fi, or the slower 2.5G EDGE network, if someone is using a TV tuner card in their PC. This essentially "turns your iPhone or iPod touch into an on-demand media center," the site says.

OrbLive's application sounds very similar to what the SlingPlayer does. Eyler admits the situation is confusing and a bit frustrating. But he says the company isn't getting too bent out of shape about things.

"We think our app is awesome," he said. "There is a lot of Wi-Fi out there. Of course, we'd like it to be available on a 3G network, and that's ultimately our goal. But we don't have any more details about the decision making process."

Update 11:02 a.m. PDT: This still leaves the question of why. Sling was bought by EchoStar, owners of Dish Network, in 2007. Sling sells standalone Slingboxes, but Dish Network now also offers integrated Slingbox capabilities in its combination satellite TV/DVR boxes. That means AT&T and Echostar both sell TV subscription services with DVR capabilities. But Dish's product could be considered by some consumers to be superior given the Sling capability. Handicapping that capability on the iPhone would cut into that perceived superiority. It's unclear if there's a direct connection there, but it is worth noting.