Sprint has been running under the radar a commercial full-length movies streaming service for the last month, officials from the carrier’s movie content provider MSpot confirmed today.

MSpot CEO Daren Tsui said that Sprint soft-launched its MSpot Movies service last month, featuring 10 full-length films customers can stream to their Vision phones serially in roughly five-minute increments—similar in length to the chapters or scenes on a DVD movie. The movies aren’t exactly first run though. The most recent movie of the 10 currently available is Short Circuit, a family film from 1986. Most of them are in the Classics genre, including films like “One-Eyed Jacks,” a Marlon Brando-directed western from 1961, and Angel and the Badman, a John Wayne film from 1947.

Tsui, however, said film rights are notoriously difficult to procure with competition for new releases spread among the cable, broadcast television, pay-per-view and rental industries. Since its movie service is a first of its kind, it has to accept movies that are past their heyday in order to get it off the ground. But MSpot’s content library has been growing. It now has deals negotiated for the rights to 380 films, and as the service gains attention and subscribers, Tsui expects the movie studios will have more interest in putting newer content on the network.

“The closer you get to the theatrical release date the more complicated the negotiations with the movie studios,” Tsui said. “We’ll eventually get to the point where we’ll be able to get movies soon after theatrical release.”

That all depends on how well the service does though. While the wireless industry has generally embraced video as a groundbreaking new format for mobile content, there is still a huge debate over what form that content will take (See Wireless entertainment takes shape in this week’s Telephony). Shortly after news of Sprint’s movie service appeared, ZDNet released a list of seven reasons why movies on the cellphone won’t work, including limited battery life, the limited capabilities of handset media players and the obvious issue of trying to watch a movie intended for the silver screen on a 2-inch by 2-inch display.

But recent moves in the industry have shown that there may be some interest in longer video streams. Apple and the wireless carriers have begun selling re-runs of popular TV shows like ABC’s Lost and Desperate Housewives for download or streaming over the iPOD or video phones. And the most successful video streaming provider so far MobiTV have reported that customers are streaming TV content on their phones for much longer than the few-minute increments originally expected.

Tsui said that due to the newness of this type of service there will be a period of adjustment, but he expects customers and carriers will grow into the service as they see its advantages. “This is a controversial service,” Tsui said. “Some people don’t believe in it because of the small screen size, but look at the market. Services like MobiTV, Sprint TV and [Verizon Wireless’s] V Cast have been doing great. There is a consumer appetite for video on the mobile phone. You can’t dispute that.”

The movie service will come in two forms, a lower-bandwidth, lower-frame rate service for Vision customers on the Sprint’s CDMA 1X vision service and a high-frame rate, better quality stream for 3G customers on Sprint’s new Power Vision EV-DO network. Both will cost $7 a month for unlimited streaming. Sprint said it plans to offer new movie content each week eventually adding older television shows like the Three Stooges and Starhunter 2300. The service will also have music concert channel, streaming footage from live performances by the Roots and other artists.

The service isn’t MSpot’s first venture with Sprint. This summer Sprint launched MSpot Radio, a streaming music service that adds interactive capabilities to what would ordinarily be a static broadcast. MSpot has been planning its movie service for some time and also plans to launch a revamped version of its radio service to allow users to build their own customized playlists.