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T-Mobile to launch pay TV service to end your pain

It's acquiring a TV tech startup that will help it get into the television market, with service starting in 2018.

T-Mobile Announces First Quarter Earning Results

T-Mobile will offer a paid service starting next year. 

Justin Sullivan/Getty Images

T-Mobile is getting into the the television business with the acquisition of Layer3 TV, a TV tech company. The new service will launch next year, according to T-Mobile CEO John Legere.

The wireless carrier is billing the service as a breakthrough for people who "love their TV, but ... hate their TV providers." The service will combine streaming TV and online video at a lower cost and won't restrict customers to lengthy contracts or bundles that include channels or content they don't want to watch, T-Mobile said Wednesday.

"We're gonna fix the pain points and bring real choice to consumers across the country," Legere said. "It only makes sense for the Un-carrier to do to TV what we're doing to wireless: change it for good!

Layer3 TV service, which launched in 2013 and has raised more than $80 million in funding, is a new web-based TV service that's trying to provide an alternative to traditional cable or satellite TV.  While it offers many of the same channels as a traditional cable provider, it also integrates content from online video providers, like Netflix and YouTube. Then it layers in social media feeds to the viewing experience. The service is currently available in five markets, including Denver, where it's based, Los Angeles, Chicago, Washington, DC, and Dallas-Fort Worth.

T-Mobile's move into the paid TV market comes as growth in the traditional wireless market dries up and mobile companies look to add video for new growth.  AT&T is in the process of buying Time Warner, home of "Game of Thrones" and Batman, so it can own more of the content you watch, and has bundled HBO for free to some of its higher-end wireless customers. Verizon has invested in a mobile video service called Go90 and in creating short-form video geared toward younger audiences.

Now T-Mobile, the third-largest wireless player, well behind Verizon and AT&T, is trying to get into the game. This isn't T-Mobile's first foray into video. In September, the company partnered with Netflix to bundle its wireless service with Netflix's online video offering. Two years ago it launched Binge On, a service that let customers stream unlimited data at a lower resolution quality from certain video services.

Legere said the company's move is the latest in its "uncarrier" branding initiative, which it says offers customers what they want without the conventional constraints served up by its competitors.

T-Mobile will be entering a crowded field, and it's unclear how it will differentiate its offer. For instance, Comcast, the leading cable provider in the country, already offers an internet-based service on its X1 platform. AT&T also offers a similar offer through DirecTV. It not only offers slimmed-down web-based access to television but also traditional satellite TV service.

Then there are the services from internet companies, such as Dish Network's SlingTV, Google's YouTube TV, Hulu's live TV service, Sony's PlayStation Vue, Philo, which is backed by several cable TV networks, and FuboTV, which primarily offers live sports.

Layer3 founder and CEO Jeff Binder said on the call that what made his company different from the rest of the industry is that Layer3 "loves our content partners."

Legere said T-Mobile will bundle the video service with its wireless service, but it won't be anything like offers from AT&T, which gives the best deals only to customers who also sign up for satellite TV service.

Still, Layer3's current offer is pricey. It charges $75 for more than 275 HD channels, some 4K streaming and a whole home DVR. It also includes access to apps like YouTube, Facebook, iHeart Radio and Pandora.

T-Mobile executives said they plan to continue to offer the current Layer3 TV service for now. But they'll announce details of the new T-Mobile branded service sometime next year. The new TV service won't be limited to T-Mobile's network, executives said. This means it'll work on any internet-connected device and with any broadband service.

First published Dec. 13, 8:07 a.m. PT
Update, 10:30 a.m.:
Adds information from conference call. 

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