T-Mobile has announced the acquisition of a small streaming television provider called Layer3 TV, which currently operates in five U.S. cities. Similar to services like YouTube TV and PlayStation Vue, Layer 3 carries the signals of most U.S. cable networks and pay channels like HBO, Showtime, and ESPN, but bundles them with a straightforward HD decoder and PVR set-top box that connects to a television in your living room. Think Tivo.
T-Mobile says that it will use Layer3's technology to launch its own over-the-top TV service sometime in 2018, positioning itself as a more customer-friendly and likely cheaper alternative to the cable companies, many of which, like AT&T DirecTV and Dish's SlingTV, have endeavored to pivot to over-the-top in recent years.
In a blog post and companion video, T-Mobile said that it "the Un-carrier will build TV for people who love TV but are tired of the multi-year service contracts, confusing sky-high bills, exploding bundles, clunky technologies, outdated UIs, closed systems and lousy customer service of today's traditional TV providers." According to a University of Michigan report quoted by T-Mobile, "8 of the 10 brands with the lowest customer satisfaction scores in America are cable and TV providers."
It's unclear at this time what T-Mobile's over-the-top TV service will look like, and whether, like the bundling schemes that the company is criticizing, it will be offered at a discount with wireless service. More likely, the service will be offered separately in various tiers depending on how many channels, with the data usage zero-rated for T-Mobile's own wireless customers.
While Layer3 TV is only available in five U.S. cities right now, T-Mobile promises to rapidly expand that presence post-acquisition. "The Un-carrier's new TV service will take full advantage of T-Mobile's nationwide retail presence, top-rated brand and award-winning sales and customer care organizations." There's no word on whether T-Mobile will be jumping into the potentially lucrative but enormously expensive content business a là Netflix, Hulu, Amazon, and others, but it's unlikely to do so at first, especially since it's partnered with Netflix itself with its T-Mobile ONE Family bundle.
T-Mobile also claims that the time is right for the Layer3 acquisition because of its capable 4G LTE network and all of the work it is doing to prepare for 5G. Given that, unlike AT&T, Verizon, Dish, Comcast and others, T-Mobile doesn't offer home internet, whatever TV service T-Mobile offers will likely be heavily optimized for its T-Mobile ONE plan, which means plenty of downsampling to 480p over LTE connections.
What do you think of this move? Would you sign up for a T-Mobile TV service?
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