At issue is an app -- one of those small programs you download from the iTunes Store to run on an iPhone or iPod Touch. But there's nothing little about the implications for consumers, who are the victims as the companies take turns picking their pockets.

The app in question, the SlingPlayer Mobile, is used in conjunction with a device called the SlingBox made by EchoStar, part of Charles Ergen's video empire that includes satellite broadcaster Dish Network Corp.

Once you've plugged a SlingBox into your cable box or satellite receiver and your home network, you can access, view and control your own TV over the Internet from anywhere in the world, watching on your computer or phone all the video you have access to at home.

The tech industry calls this "location-shifting," but in fact it's sort of magic. You can view premium programming you've purchased, such as HBO or the Major League Baseball Extra Innings out-of-market package. You can also change channels, watch programs you've saved on a digital video recorder and even order pay-per-view. A displaced University of Southern California football fan I know watched the live U.S. broadcast of this year's Rose Bowl while sitting in a London flat.

Combined With iPhone

Now imagine combining this technology with Apple's iPhone, with its ultra-bright, high-resolution screen and access to AT&T's high-speed 3G wireless data network. The result is marvelous - having your own home TV service, premium content and all, in your pocket, wherever you are.

Oh, sorry, did I write "is marvelous"? I meant "would be marvelous" -- because AT&T and EchoStar have combined to throttle many of the benefits the technology ought to yield.

The saga started earlier this year, when EchoStar's Sling subsidiary submitted its app to Apple, whose iTunes Store serves as the conduit for all application destined for the iPhone and iPod Touch. EchoStar priced the software at US$29.99, making it one of the most expensive programs available for the iPhone -- a fairly breathtaking act of chutzpah, given that anyone who could use it would have already shelled out from US$180 to US$300 for the SlingBox itself. It's a little like selling you a car and charging extra for one of the doors.

For more than a month, Apple neither rejected the program nor released it. Meanwhile, its partner AT&T - the exclusive service provider for the iPhone in the U.S. -- used the time to figure out a justification for keeping the program off its network. It ended up concluding that its terms of service barred video location-shifting.The result: The SlingPlayer Mobile app finally released last month only works over a Wi-Fi connection. In other words, you can forget the "mobile" part; the only way you can watch your video is by remaining tethered to a Wi-Fi hotspot. Walk a hundred feet down the sidewalk, and you're out of luck. In a statement, AT&T explained it was afraid its network would be overwhelmed by all those iPhones, raising the specter of the nation's second-largest wireless carrier being brought to its knees by hordes of crazed "Entourage" viewers.

Phones or Computers?

"SlingBox, which would use large amounts of wireless network capacity, could create congestion and potentially prevent other customers from using the network," the statement said, adding that "we consider smartphones like the iPhone to be personal computers in that they have the same hardware and software attributes as PCs."

As anyone who's experienced the vagaries of the AT&T network can attest, anything that would make it less reliable is a scary prospect. At the same time, there's something a little disingenuous in that statement.

For one, other smart phones -- including BlackBerrys made by Research In Motion Ltd., as well as phones running the Windows Mobile operating system from Microsoft Corp. -- already can run their own versions of the SlingPlayer Mobile over the AT&T network. AT&T says all those users are violating its terms of service too, though -- unlike the maneuvering aimed at iPhone users -- the company hasn't taken any steps to prevent it.

Meanwhile, AT&T itself is in the business of - you guessed it - selling TV programming to be delivered on mobile devices. While its Mobile TV service -- US$15 or US$30 a month, depending on the plan --doesn't yet work with iPhones, compatibility is on the way. And it's mighty unlikely that anyone who could see their own already-paid-for content on an iPhone by way of a SlingBox would pony up extra for AT&T's service.

With AT&T publicly acknowledging the inadequacy of its network and EchoStar price-gouging for a deliberately crippled piece of software, it's tough to see who exactly wins from this situation. But it's easy to see who loses.

Rich Jaroslovsky is a columnist for Bloomberg News.