One of the more overlooked features of the new iPhone 3.0 is support for a new open standard for live video streaming over HTTP, which promises to open up standards-based video broadcasting to a wide audience while giving mobile users an optimized picture as they roam between WiFi and mobile networks.

At the March unveiling of iPhone 3.0, Apple only dropped a subtle hint about new streaming video features in the new operating system (literally limited to writing “streaming video” on the slide of other features, below), leaving out any details about how it would work and not even mentioning the feature in any detail in the presentation.

The technology behind HTTP Live Streaming leaked into public knowledge in May when Apple submitted it to the Internet Engineering Task Force (IETF) as a draft standard on track to become an RFC (or Request For Comments, the memorandum used by the Internet Society to define how technologies work in order to foster cooperation and compatibility between the vendors implementing them).

Apple’s HTTP Live Streaming proposed draft looks a lot like a method Microsoft began selling last year, called Smooth Streaming. The difference is that Apple’s proposed IETF standard can use anybody’s encoder and broadcast server, and will work with any client software designed to receive the stream. In contrast, Microsoft’s Smooth Streaming is of course designed to exclusively use Microsoft Expression Encoder, Microsoft Internet Information Server with a Smooth Streaming extension, and requires Microsoft’s Silverlight 2 on the client.

Essentially, Apple wants a standard for streaming video that anyone can use so that it can continue selling hardware without being either shut out of the market by proprietary software, or held captive by it; Microsoft, as a software vendor, wants to create another captive market where it has the power to shut out competitors at its whim.