In a significant policy reversal, AT&T announced Thursday that it will allow Sling Media's iPhone app to run on its 3G network. That means owners of various Sling Box devices can watch live, streaming TV, as well as DVR-recorded content and movies downloaded at home, using an iPhone without a Wi-Fi connection.

Last May, AT&T claimed Sling's iPhone app would "create congestion" on its 3G network. It ran tests in December, and now concludes that "the optimized app can run on its 3G network" and said it has alerted both Apple and Sling to its decision.

What changed? In part, the Sling app itself, according to AT&T.

AT&T's announcement claims that while the Sling iPhone app had always been optimized for 3G, AT&T "worked with" Sling to make it even more efficient (i.e., degraded video and/or audio quality until the Sling app consumed an acceptable amount of bandwidth). In the future, when an app developer presents something consumers want, but which takes up too much of AT&T's wireless bandwidth, AT&T plans to do the same.

"Just as we've worked with Sling Media in this instance, we look forward to collaborating with other developers so that mobile customers can access a wider, more bandwidth-sensitive, and powerful range of applications in the future," said AT&T mobility and consumer markets president and CEO Ralph de la Vega.

Some degree of AT&T oversight of apps makes sense, because its poor wireless performance is, to an extent, a casualty of the iPhone's runaway success (which could be why AT&T allows Sling to stream to other smartphones over 3G). By working with developers to limit their apps' bandwidth, AT&T hopes to give consumers what they want without further degrading its network.

Only yesterday, Skype announced that it will soon offer an iPhone app that operates on its 3G network. That follows AT&T's decision to allow VoIP apps to run over its 3G network, despite those apps' ability to make calls without using voice minutes. Skype says the reason it has yet to deploy one is that it is tweaking audio quality, likely so that it still sounds good despite AT&T's restrictions on app bandwidth.

SlingPlayer Mobile is one of the most expensive on iTunes – $30 – and it works only if you have Sling hardware at home that costs hundreds of dollars. But it integrates with any video system, including TiVo. Slingbox aficionados have been watching their home channel lineup and programming anywhere in the world on their laptops using downloadable software and, more recently, via a web interface. In addition, owners of selected Blackberry, Symbian, Blackberry, Palm, and Windows Mobile phones have been able to stream over 3G to their cellphones for over a year. But there are no monthly fees and no new service to sign up for: You simply run SlingPlayer and watch as if you were home. You can operate your DVR to record programs, play movie rentals and call up video-on-demand, making it all available in your pocket.

AT&T's 180-degree reversal on Sling's streaming television app and Skype's internet calling app for the iPhone did not happen in a vacuum.

First, this Federal Communications Committee has teeth. The new sheriff in town has shown a particular interest in making sure the bond between device manufacturers and network operators does not unfairly reduce consumer choice. Plus, AT&T needs a favor from the FCC in another area, as it seeks permission to switch from landline voice service to IP-based voice service (an AT&T spokesman said the company wants the FCC to establish a timeline for the transition similar to the one it set for DTV).

FCC pressure forced AT&T to allow VoIP onto the iPhone, and fear of similar pressure in the media streaming area could have affected its decision about Sling. (AT&T already allowed Major League Baseball to stream, as The New York Times points out, providing ammunition for Sling and consumer groups who complained to the FCC that AT&T's refusal to support Sling was discriminatory.)

The iPad also played a role in AT&T's not-so-sudden change of heart. Apple did AT&T some big favors with the iPad not only by making AT&T the default service provider, but by using a micro SIM card instead of a normal SIM card, which will allow AT&T to charge separately for iPhone and iPad connections. In return, Apple likely pressured AT&T to allow these apps, making the iPhone and iPad more attractive and fighting consumers' growing impression that this limitless-seeming device is constrained by AT&T's data service.

What matters today is that Sling will work on the iPhone through AT&T's 3G network. What matters tomorrow is how the video looks, and how the audio sounds, following AT&T's "optimization" of the app.

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