T-Mobile to acquire Layer3 TV, launch 'disruptive' video service next year

Layer3 currently offers its TV service across five cities in the United States. (Layer3)

T-Mobile inked a deal to acquire Layer3 TV and will launch a “disruptive” new TV service next year.

Terms of the deal were not disclosed.

Layer3 offers cable TV, premium channels, streaming online video and social media in five cities across the United States. T-Mobile said it will leverage Layer3’s content to compete with legacy cable and satellite video providers, challenging existing distribution models.

T-Mobile didn’t offer pricing or other details regarding the upcoming service, but said the internet-based offering will be tiered and include an ad-subsidized component. The service will be available to all consumers—not just T-Mobile customers—on phones as well as home TV platforms such as Apple TV.

“People love their TV, but they hate their TV providers. And worse, they have no real choice but to simply take it—the crappy customer service, clunky technology and outrageous bills loaded with fees,” T-Mobile CEO John Legere said in a press release. “It only makes sense for the un-carrier to do to TV what we’re doing to wireless: change it for good.”

Complete T-Mobile/Layer3 coverage:
T-Mobile to acquire Layer3 TV, launch 'disruptive' video service next year
T-Mobile not planning on buying original content for its pay-TV service
Editor's Corner—TV is now clearly the wireless industry’s new battleground
Editor's Corner—T-Mobile’s Legere declares disruption for ‘arrogant’ pay-TV biz … that’s already plenty disrupted

The announcement comes just a month after T-Mobile and Sprint called off negotiations of a merger that would have seen the U.S. wireless market consolidate from four major carriers to three, and it marks the latest tie-up—or attempted tie-up--between a video provider and a mobile carrier. AT&T is hoping to gain regulatory approval of its $85.4 billion acquisition of Time Warner; Verizon has MVNO deals in place with both Comcast and Charter; and Sprint recently announced an agreement to support an MVNO from the cable operator Altice.

“We’re going to bring together the best of home and mobile and home TV” services,” Chief Operating Officer Mike Sievert said during a conference call to discuss the announcement. “It’s going to be a pay service, with 250 channels of high-definition” programming.

T-Mobile is no stranger to mobile video, of course, although the Layer3 service will mark its first foray into the OTT market. In September the carrier began offering free Netflix subscriptions to its customers, and it has gained significant traction with its zero-rated Binge On service.

Like AT&T’s DirecTV Now and Verizon’s ever-growing digital video business, T-Mobile’s new service will be designed not just to generate subscription revenues but also to deliver highly targeted ads to users across hardware platforms. And the transition to 5G will provide an opportunity for T-Mobile to compete against fixed-line service providers, Sievert said.

“With 5G, the traditional barriers between mobile internet and home internet are falling away,” he continued. “(Our service) will work on anything—it’ll work on your Comcast internet connection, it’ll work on your DSL connection.”