Why T-Mobile Just Bought a Digital Streaming Service

The company wants to bring its 'un-carrier' mentality to the TV market

T-Mobile’s expansion into high-quality video distribution also opens the door for addressable advertising opportunities.
T-Mobile

T-Mobile is acquiring cable killer Layer3 TV, a three-year-old streaming TV service that offers every major broadcast and cable channel in HD, to select U.S. markets.

“People love their TV, but they hate their TV providers,” boasted T-Mobile president and CEO John Legere while announcing the deal. “And worse, they have no real choice but to simply take it—the crappy customer service, clunky technology and outrageous bills loaded with fees.”

Legere aims to bring T-Mobile’s “un-carrier” mentality to the TV market with the bundling technology, which is in line with other cable streaming services like YouTubeTV, Sling, Hulu Live, and DirecTV Now. However, Layer3 is not a skinny bundle; it includes up to 250 channels for the cable-like price of $75 a month. Pricing, packaging and distribution will likely change as T-Mobile plans to launch what it calls “a disruptive new TV service” next year. Users won’t need to be T-Mobile customers.

The move follows other video-focused plays by T-Mobile, including offering Netflix for free for members of the T-Mobile ONE program.

“TV is no longer about a physical TV, and hasn’t been for a good long while,” said Rebecca Lieb, co-founder and analyst with Kaleido Insights. “Screens are screens now, and cord-cutting will continue across every generation. Packages from cable companies will soon become obsolete.”

T-Mobile’s expansion into high-quality video distribution also opens the door for addressable advertising opportunities.

“The targeted and segmented data that T-Mobile collects will allow for more streamlined and targeted advertising,” said Agathe Blanchon-Ehrsam, CMO at strategic consulting firm Vivaldi. “But even better is if the behavioral and actionable insights lead to curated content delivery and personalized audience engagement, which doesn’t interrupt like advertising, but enhances the viewing experience.”

Blanchon-Ehrsam believes streaming TV represents a “game-changing opportunity to create contextual and more localized content.”

Others are cautiously optimistic. “T-Mobile joining the disruption with the acquisition makes total sense, but time will tell if they can deliver,” said Jim Fosina, CEO of Fosina Marketing Group, adding that “the legitimacy” of the cable-streaming industry is “just further strengthened with T-Mobile’s announcement.”