T-Mobile is taking its “Un-carrier” moniker to the bank or, better yet, to the screen with the launch of a new TV service. The company announced its plans Wednesday, saying that the “disruptive” internet TV service would be released in 2018 in tandem with tech company Layer3 TV.
Layer3, a scrappy Denver-based startup that is billing itself as a better Comcast, has been making a splash in tech circles for its bold strategy of wanting to join cable TV while the industry is rushing to build web-based platforms that take advantage of streaming and other internet-centric features.
T-Mobile’s deal with Layer3 will see the phone carrier absorb the new cable company while keeping some of its talent aboard, or as a news release phrases it, we “will work with Layer3 TV’s leading technology and talent to create T-Mobile’s new TV service.”
T-Mobile says it will launch TV service in 2018
No details have been released on how much the deal is costing T-Mobile, but last year it was reported that Layer3 had raised nearly $100 million from Los Angeles-based talent outfit Creative Artists Agency and global private investment firm TPG.
Layer3 has been able to offer better streaming quality by renting privately managed networks (not via the commercial internet like Netflix), according to the Wall Street Journal. Such a strategy is more costly, but cheaper than outbuilding like a cable company.
Last year, Layer3 CEO Jeff Binder told Wired magazine that its approach would yield enormous returns even if it captured a fraction of the market. “Even a company like Cablevision had just 3 percent of the United States market, and it sold for nearly $20 billion,” he said.
T-Mobile CEO John Legere has ambitious plans for its new service, saying he wants to tap into the enormous frustration experienced by customers that have to deal with “exploding bundles,” terrible customer service and limited channels. “It’s no secret these guys are the absolute worst,” he said in a vlog about the deal. “Mobile is now the #1 way millennials watch TV and other media. And 2.8 million have cut the cord in the last two years.”
Legere said that statistics show that American adults are watching up to five hours of TV per day. “People want their TV, they just don’t want it from Big Cable.”
Money expert Clark Howard says that T-Mobile’s strategy is in line with what the internet service providers are doing to stem mass losses from people dropping their services.
“Everybody’s racing to come out with their own TV service, because everybody realizes that traditional paid TV is a goner. Most of the services won’t survive, but in the mean time you’re going to have access to much cheaper TV as these companies slug it out.”
Clark says T-Mobile will be able to flaunt the TV service as a way to gain market share toward their main business: Selling phone services.
“It’s is not their business, it’s just another thing they’re going to offer,” he said, referring to TV service. “It doesn’t really matter if they make money doing it. It’s just another way for them to attract customers to their phone service.”