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T-Mobile jumps into digital TV with Layer3 acquisition

AP Photo/Hermann J. Knippertz

T-Mobile, which has risen to become the nation's third-largest wireless provider, is buying digital cable startup Layer3 TV to launch a nationwide digital internet-TV service in 2018, the company announced Wednesday.

Why it matters: T-Mobile joins AT&T and Verizon in launching its own video service, creating another challenger to traditional cable and satelite TV providers, which have been losing pay-TV subscribers as they migrate towards cheaper, digital options.

  • T-Mobile has been pushing to stay compeitive in the race for wireless consumers for years through partnerships with Netflix and unlimited data offerings. The company discussed a merger with Sprint earlier this year, but talks fell through after neither company could decide which entity would take majority stake in the merger.
  • The announcement falls in line with T-Mobile's pitch that it is a more consumer-friendly option than big cable proviers like AT&T and Verizon. Layer3's bundle does not look the same as some of the other "skinny bundles" out there, like AT&T's DirectTV or Dish' Sling. It's pricer, but offers more digital HD channels (275), as well as high-end DVR capabitilies and access to other digital apps.
  • T-Mobile executives also stressed how much it values relationships with content providers, saying there are "no holes" in its relationships with content providers on a call with reporters and investors Wednesday. (Pay-TV providers and TV networks have been increasingly getting in fights over the cost of programming, which affects consumers' access to programming.)
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