T-Mobile this week pitched its upcoming TV service as its next big "UnCarrier" move, but with few details, the announcement was the least exciting and least disruptive thing I've heard from T-Mobile in a while.
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While T-Mobile has been driving competition in wireless for a few years now, this reveal seemed more tailored for Wall Street than T-Mobile customers, celebrating the purchase of a little-known streaming TV firm without explaining just what T-Mobile's going to do with it.
The little I've heard about UnCarrier TV is uninspiring. Analyst Avi Greengart says it will be "Sling TV at a higher price point with [a] broader channel lineup." But that can't disrupt the cable industry because it can't break the double- or triple-play bundle. For T-Mobile to truly disrupt TV, it needs to disrupt home internet.
What's funny is that Layer3 TV, the company T-Mobile bought, understands this. Layer3 doesn't just offer a streaming bundle—it runs wires to homes, which is why it's only available in a few cities. It's extremely complex and expensive to run new cable, though, and T-Mobile shows no signs of continuing Layer3's plans there. Rather, it bought Layer3 for its cable-like TV content bundle and its efficient encoding technology.
In the current internet-centric world, cable providers keep their fists around your neck because they're usually the only game in town for fast, high-volume home internet. They charge high prices for the fast internet connection you'd need for TV streaming, and then relatively low promotional prices for a basic cable package on top of that. Once the promotion time expires, you're locked in by inertia. Sling and PlayStation Vue have made some inroads, but the power of defaults is huge. People don't generally want to pay multiple bills to multiple providers, if they can avoid it. The home internet monopolies keep cable intact.
For an example, Spectrum here in New York charges me $65 for my standalone home internet service. A Spectrum Internet + TV double play would cost only $25 more for the first promotional year. Yeah, it would shoot up after that, but Americans don't look at those kinds of details. I deal with readers all the time who are still paying high rates on old wireless plans when they could be paying less by switching plans. Inertia is very powerful.
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The end of net neutrality could also throw a big wrench into T-Mobile's TV plans, if it doesn't have its own pipe to supply the TV content. Cable companies probably won't block T-Mobile TV, because that's too heavy-handed, but they could make sure it buffers more or provides lower-quality video than their own services. If the cable internet companies keep their machinations mysterious enough that T-Mobile TV just appears to be a lousy product, they'll fend off the competitor without attracting much heat.
A reminder: half of all American households have either zero or one option for a home internet provider offering 25Mbps speeds, according to Ars Technica. Where there's competition in the US, it's usually either with a DSL provider that's too slow to deliver whole-home video streaming, or with a wireless or satellite provider that de-prioritizes your connection at a fraction of the 190GB per month the average American home uses each month.
If T-Mobile doesn't break that monopoly, then its TV play is just a lame game of catch-up with AT&T. That's why Wall Street is so interested in this purchase: AT&T has DirecTV and is able to offer complex, multiple-play bundles that T-Mobile can't match. But DirecTV is superior to T-Mobile's potential offering because it doesn't rely on your existing cable company to deliver its service.
I should also throw in there that if T-Mobile TV doesn't offer some sort of DVR solution, it's not competitive. But that doesn't affect my core argument.
T-Mobile 5G Must Break the Cable Monopolies
Yet Another Streaming Service, served via the overpriced cable internet you hate because you have no other choices, is not going to rock the world. Sorry, John. And I don't believe that Americans are going to give up their home internet and watch everything on their phones.
For T-Mobile to disrupt TV, it's going to have to offer a home-scale internet service, so people can watch their T-Mobile TV on multiple devices without getting de-prioritized after a few days.
None of the major wireless providers offer a 4G-based home internet service because 4G networks don't have enough capacity to give everyone an average of 190GB per month. But some 5G networks will, Verizon told me at an event last month. Next year, Verizon plans to roll out a 5G home internet product in three to five cities, starting with Sacramento, CA.
T-Mobile offering 5G home-scale internet would be a swerve for the company. T-Mobile CEO Neville Ray told CNET last week that the company wasn't interested in offering home internet because "the economics are flawed." That sounds to me like T-Mobile hasn't figured out how to make money on the kind of massive data consumption that a home TV service would imply.
You can't have internet-based TV without an ISP, and there's a desperate thirst for home broadband alternatives in this country. Pretty frequently, I get emails from readers who want to use 4G hotspots as their primary home internet access, and I have to break it to them that it'll only work if they sip, rather than gulp down their data.
In the merger announcement, the CEO of Layer3 said that "No market needs Un-carrier-ing more than pay TV." That's totally untrue. No market needs un-carrier-ing more than home internet. Without that step, un-carrier-ed pay TV will just be another curiosity in a crowded field of over-the-top services, while most people still take bundles from their cable provider, and grumble about it.