John Legere is clearly enthused by T-Mobile’s opportunity to build a compelling TV service, but the wireless world’s Batman, as he likes to call himself, seems even more excited by the chance to grapple with a whole new cast of corporate enemies.
“Do you think those other players from wireless, who think they have entered this space, and the cable TV companies are sitting there today saying, ‘This is nothing to worry about — we don’t take these guys too seriously’?” he asked. “Or do you think they’re shitting themselves that the same group that was unafraid of AT&T and Verizon is now coming after the cable players?”
The T-Mobile CEO, who has spent the past five years beating up on those larger wireless companies, posed those questions in response to a reporter’s skeptical question about the prospects for T-Mobile’s new TV service, slated to debut in 2018.
It might be easy to dismiss his comments as mere bravado — if not for the “Uncarrier’s” success adding millions of customers at the expense of its larger wireless rivals. But can Bellevue, Wash.-based company really do the same to Comcast, Charter and other cable and satellite TV companies?
Here’s how Legere and team will attempt to disrupt the TV industry.
Betting on 5G: T-Mobile’s new TV service will work over a regular home cable or DSL connection, if that’s what you want, but the company’s big plan is to leverage its own wireless network to deliver T-Mobile TV — a key potential advantage vs. other “over the top” IP-based TV services. If that sounds sketchy, they say, just wait until you experience next-generation 5G wireless.
“With 5G, of course, the traditional barriers between mobile internet and home internet are falling away — this convergence of what was wireline and wireless and what’s fixed mobile and what’s mobile,” said Mike Sievert, T-Mobile’s chief operating officer, on a conference call. “The fact is, people have connections to broadband. We are a major provider of those connections, and now we’re providing something that they can do with it, which is to watch all the TV content they want, wherever and whenever they want.”
T-Mobile is targeting 2020 for a national rollout of its 5G network, in part by leveraging spectrum it won in this year’s FCC auction.
Leveraging existing stores and customers: T-Mobile US has 16,000 retail stores and 71 million customers, and it ships 40 million smartphones a year — existing relationships that Sievert described as “major opportunities” to get people to try its new TV service on a variety of devices, including smartphones and set-top boxes.
By comparison, Comcast had 21.5 million residential customers as of the end of the third quarter, so in some ways T-Mobile is operating from a surprising position of strength.
Acquisition of Layer3 TV: T-Mobile announced plans for the new service in conjunction with an agreement to acquire Layer3 TV, a Denver-based company founded by cable veterans Dave Fellows and Jeff Binder, with a team of senior execs from many of the largest tech and media companies. Layer3 has developed an IP-based TV service, including a set-top box, and the company touts its relationships with content providers as one of its key advantages.
T-Mobile isn’t saying how much it will pay for Layer3 but it’s obviously far, far less than the $49 billion that AT&T paid for DirecTV, which makes sense given the relative scale of the two services. Layer3 had raised about $100 million in funding as of last year.
Legere made it clear that T-Mobile will be leveraging not just the existing Layer3 technology but also its engineering and product development talent to create the new T-Mobile TV service. The company says the idea is to make the experience as interactive and social on the big screen as it is on smartphones today, building those technologies natively into the experience.
Opportunity for disruption: It’s no coincidence that Legere is taking aim at cable’s practice of bundling TV, phone, Internet and other services for the best prices. One of T-Mobile’s first signature “Uncarrier” moves was essentially a pricing strategy, decoupling the cost of the phone from the monthly price of the wireless service.
There are opportunities galore for T-Mobile to appeal to TV customers by simplifying and streamlining the way people pay for TV. Ideally that would translate into lower prices, but T-Mobile isn’t saying how much it plans to charge. Also working in T-Mobile’s favor is the shift toward viewing content on smartphones and other mobile devices, although its service will also work on large screens.
On a conference call with reporters and analysts, Legere said the Layer3 acquisition and T-Mobile TV plan would have gone forward regardless of the fate of T-Mobile’s merger talks with Sprint. But the fizzling of that deal could turn out to be a blessing in disguise, if it allows the company to focus even more intently on disrupting a second industry.
“I hope they don’t take us seriously,” Legere said, “because this will be as big, if not bigger, than the revolution we created in wireless.”
