An industry executive said to be familiar with the company’s plans tells Multichannel News that Netflix plans to extend its Watch Instantly video-streaming service to the Nintendo Wii and to the iPhone and iPod touch as well.

It’s not entirely clear how the company plans to bring Watch Instantly to the iPhone. Presumably, it will use a native iPhone app, since the device doesn’t support Silverlight, Microsoft’s (MSFT) Flash-esque also-ran.

That said, there are some hurdles to negotiate there since native video streaming on iPhone 3.0 doesn’t yet support digital rights management.

Another issue likely to prove problematic: Bandwidth. Watch Instantly streaming typically requires a fair bit of bandwidth and might prove problematic over 3G connections. AT&T (T), which hobbled SlingPlayer Mobile for iPhone over bandwidth concerns, will probably see things that way. Which means Netflix’s app, if it is indeed in development, will be limited to Wi-Fi like the SlingPlayer.

Beyond that and the DRM issue, there’s not much more I can think of to prevent such an app from being brought to the iPhone. There’s not much overlapping content between Watch Instantly and Apple’s iTunes service. And even if there was, there’s no real rivalry here that might inspire Apple to block Netflix’s (NFLX) service. iTunes is run pretty much at break-even to support sales of Apple (AAPL) devices. And a Netflix app for iPhone would arguably help Apple do that as well.

An industry executive said to be familiar with the company’s plans tells Multichannel News that Netflix plans to extend its Watch Instantly video-streaming service to the Nintendo Wii and to the iPhone and iPod touch as well.

It’s not entirely clear how the company plans to bring Watch Instantly to the iPhone. Presumably, it will use a native iPhone app, since the device doesn’t support Silverlight, Microsoft’s (MSFT) Flash-esque also-ran.

That said, there are some hurdles to negotiate there since native video streaming on iPhone 3.0 doesn’t yet support digital rights management.

Another issue likely to prove problematic: Bandwidth. Watch Instantly streaming typically requires a fair bit of bandwidth and might prove problematic over 3G connections. AT&T (T), which hobbled SlingPlayer Mobile for iPhone over bandwidth concerns, will probably see things that way. Which means Netflix’s app, if it is indeed in development, will be limited to Wi-Fi like the SlingPlayer.

Beyond that and the DRM issue, there’s not much more I can think of to prevent such an app from being brought to the iPhone. There’s not much overlapping content between Watch Instantly and Apple’s iTunes service. And even if there was, there’s no real rivalry here that might inspire Apple to block Netflix’s (NFLX) service. iTunes is run pretty much at break-even to support sales of Apple (AAPL) devices. And a Netflix app for iPhone would arguably help Apple do that as well.

“AT&T does not manage or approve applications for the App Store,” the company said in a statement. “We have received the letter and will, of course, respond to it.”

A flat denial, and one that would seem to throw Apple (AAPL) under the bus for denying iPhone owners access to Google Voice. Though just why Cupertino would take issue with an an iPhone application that offers free text messaging and allows users to make calls, routed via the Internet, for free in the United States and for a small fee internationally is unclear. After all, it’s not Apple’s domestic and international calling business the app is potentially encroaching on.

And AT&T (T) is being somewhat disingenuous here since it acknowledged this past May that it had SlingPlayer for iPhone black-holed from the App Store because of concerns over bandwidth.

So while AT&T may not directly “manage or approve applications,” the carrier is clearly capable of influencing management and approval of them.

Could it be that Apple is contractually bound to reject apps that might compete with AT&T’s service? An agreement like that would certainly make it easy for AT&T to adopt the hey-don’t-look-at-me stance it has taken with the FCC.

That said, it’s entirely possible that the Apple’s rejection of Google Voice apps had nothing to do with AT&T and everything to do with its increasingly complicated relationship with Google (GOOG).

As Daring Fireball’s John Gruber notes, “Google Voice is a mobile phone service provided by the maker of one of the biggest competitors to the iPhone OS. What if Google Voice were instead Microsoft Voice? And what if Windows Mobile were as modern and competitive as Android? Would you be as surprised then that Apple is discouraging iPhone owners from using the service?”

“AT&T does not manage or approve applications for the App Store,” the company said in a statement. “We have received the letter and will, of course, respond to it.”

A flat denial, and one that would seem to throw Apple (AAPL) under the bus for denying iPhone owners access to Google Voice. Though just why Cupertino would take issue with an an iPhone application that offers free text messaging and allows users to make calls, routed via the Internet, for free in the United States and for a small fee internationally is unclear. After all, it’s not Apple’s domestic and international calling business the app is potentially encroaching on.

And AT&T (T) is being somewhat disingenuous here since it acknowledged this past May that it had SlingPlayer for iPhone black-holed from the App Store because of concerns over bandwidth.

So while AT&T may not directly “manage or approve applications,” the carrier is clearly capable of influencing management and approval of them.

Could it be that Apple is contractually bound to reject apps that might compete with AT&T’s service? An agreement like that would certainly make it easy for AT&T to adopt the hey-don’t-look-at-me stance it has taken with the FCC.

That said, it’s entirely possible that the Apple’s rejection of Google Voice apps had nothing to do with AT&T and everything to do with its increasingly complicated relationship with Google (GOOG).

As Daring Fireball’s John Gruber notes, “Google Voice is a mobile phone service provided by the maker of one of the biggest competitors to the iPhone OS. What if Google Voice were instead Microsoft Voice? And what if Windows Mobile were as modern and competitive as Android? Would you be as surprised then that Apple is discouraging iPhone owners from using the service?”

The program, created by Echostar’s (SATS) Sling group, is designed to let users watch TV shows, beamed from their own sets, on the  iPhone. It goes on sale for $29.99 today via Apple’s (AAPL) iTunes store–but without the ability to work over AT&T’s 3G network.

That’s our decision, says AT&T (T). The company’s rationale: The iPhone’s too powerful, and our network isn’t powerful enough.

That’s the gist of its argument, which both makes sense and confuses. AT&T says the Sling app could consume lots of network capacity, which is straightforward enough. But you can already use Sling apps for other handsets, like the BlackBerry, on AT&T.

The difference, AT&T says, is that the iPhone really isn’t a phone at all, but a PC that happens to make phone calls. “We consider smartphones like the iPhone to be personal computers in that they have the same hardware and software attributes as PCs.”

No argument there, either. But again, given that you can use the SlingPlayer over AT&T’s spectrum using different devices, it seems as if AT&T is really making a different argument: Just because you can watch TV on other devices doesn’t mean you will. But if we give people the chance to watch TV on iPhone, they’ll flock to it–and our network can’t handle that.

See for yourself. Here’s AT&T’s full statement, via Engadget:

Slingbox, which would use large amounts of wireless network capacity, could create congestion and potentially prevent other customers from using the network. The application does not run on our 3G wireless network. Applications like this, which redirect a TV signal to a personal computer, are specifically prohibited under our terms of service. We consider smartphones like the iPhone to be personal computers in that they have the same hardware and software attributes as PCs.

That said, we don’t restrict users from going to a Web site that lets them view videos. But what our terms and conditions prohibit is the transferring, or slinging, of a TV signal to their personal computer or smartphone.

The Slingbox application for the iPhone runs on WiFi. That’s good news for AT&T’s iPhone 3G customers, who get free WiFi access at our 20,000 owned and operated hot spots in the U.S., including Starbucks, McDonalds, Barnes & Noble, hotels, and airports. AT&T is the industry leader in WiFi.

[Image credit: Markhillary]

For the relatively small but ardent number of people who already own the SlingPlayer box, which comes separately and which you’ll need to make the iPhone app work, this is a big deal. Those folks are also likely to be OK paying $29.95 for software, which is much, much more than the average iPhone app price.

For the rest of us, the noteworthy news about the SlingPlayer app is about a feature it doesn’t have–the ability to work over AT&T’s wireless network. If you want to watch your television shows on your iPhone using the app, you’ll need to be in range of a Wi-Fi network.

The SlingPlayer folks had originally promised that the app would work using either method. But somewhere along the line they had to strip that capability out in order to make it into Apple’s iPhone store.

What happened? “Ask Apple,” says a SlingPlayer rep.

I have, but haven’t heard back. But the implication here is that either Apple (AAPL) or AT&T (T), its U.S. wireless partner, doesn’t want you watching unlimited TV on the iPhone. At least not via Sling, which is owned by satellite TV provider EchoStar (SATS).

Why not? AT&T allows SlingPlayer applications on other devices. So perhaps it figures that iPhone users are much more likely to chew up network capacity than, say, BlackBerry users. Or perhaps Apple has some other issue with TV delivered over wireless via a third-party app. Anyone want to hazard a guess?

UPDATE: “The SlingPlayer Mobile app for the App Store is currently approved for use over Wi-Fi networks only. AT&T’s current terms of service do not allow for the redirection of television over their 3G network,” says Apple PR. AT&T has a longer statement which says more or less the same thing, yet leads to some head-scratching.

[Image credit: Frank Talk]