AT&T recently denied Sling Player on the iPhone over its 3G cellular data networks, making the portable video streaming client less useful if it has to be tethered to a WiFi access point. The reason behind strong-arming Apple into forcing Sling to re-write the app to only be used on WiFi? Well, for one, AT&T’s network may not be able to handle capacity, especially in light of a new iPhone model coming in Summer 2009 attracting more users to its already strained 3G network. The other reason, may be even harsher, is that AT&T is working on its own Sling Player-like client.

AT&T competes with digital satellite services like Dish Network, whose parent EchoStar, is the owner of Sling Media–the maker behind Sling Player. AT&T’s cable and satellite competition dubbed U-Verse, will soon get an I-Verse client that works much in the same way that Sling Player works right now on the iPhone, Windows Mobile, BlackBerry, Palm, and Symbian clients. The move to neuter the Sling Player from using cellular data could be seen to later promote U-Verse in light of greater competition against cable and satellite offerings in the TV and home entertainment space.

Seems like net neutrality doesn’t apply over the mobile airwaves of cellular carrier AT&T. According to Gizmodo, AT&T had demoed the I-Verse client last year to a very warm reception and now Ma Bell is pushing forward full steam ahead.