Free TV on Your Mobile Phone? What's the Deal?

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In recent months, mobile carriers have begun touting complimentary subscriptions to streaming TV services. The new perks look a lot like the old bundled packages that cable companies still offer. That's great news for mobile and TV streaming customers, but the trend may be indicative of stalling growth for telecom investors.

Bundling discounts and freebies

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It all started with T-Mobile (NASDAQ: TMUS) and its ONE plan, which allows for unlimited talk, text, and data. For customers that maintain at least two lines with the unlimited plan at $40 per line, Netflix (NASDAQ: NFLX) streaming to two devices is tacked on for free.

Struggling U.S. provider Sprint (NYSE: S) followed suit, giving away free access to Hulu, a TV streaming co-op between Disney (NYSE: DIS), Twenty-First Century Fox (NASDAQ: FOXA), and Comcast (NASDAQ: CMCSA). Sprint's version of unlimited tops out at $60 for one line and goes down from there.

The smaller mobile networks aren't the only ones in on the action. AT&T (NYSE: T) has a similar offering for its unlimited customers. It isn't the same type of streaming service as Netflix and Hulu, but the HBO channel is available starting with a $60-per-month one-line plan. The company also offers bundled packages that include phone and its DirecTV satellite service.

Yet to join the "freebies" party is mobile network leader Verizon (NYSE: VZ). It likely isn't in the fight because it's starting to roll out its own in-house TV options. Early in December, it was announced that NFL games could be streamed from mobile devices on the company's Yahoo! and AOL media platforms. It is also rumored that the company's own subscription TV streaming service could be available as soon as spring 2018.

Not out of generosity

Why would telecom companies be willing to pay their customers' TV bills? The answer is simple: Growth from adding new mobile subscribers is running out. The current generation of mobile network, 4G, isn't all that old, but the service geared toward faster speeds for data has already become commoditized.

That becomes evident when looking at subscriber growth from network leader Verizon. Net subscriber additions have been petering out over the last few years and have even declined at times.

The new perks being offered are beginning to look like bundled packages that old cable and phone companies have been offering for years. With telecom companies now fighting over the same pool of subscribers and small discount carriers trying to poach people with lower-cost plans, the big boys are willing to take a hit on their bottom line to retain their paying customers. Pairing modern TV services with phones is a perfect match to do that.

The best telecom investment

With mobile telecom facing a slowdown, and many of the big players all vying for a spot in media and TV services, I don't think that bodes well for investors. The competition is good news for consumers, though, and is good for streaming services like Netflix, too.

However, that doesn't mean that investing in mobile communications is dead. New 5G networks are being worked on and will begin initial rollout out in 2018. That has big implications for the wireless companies like Verizon at the forefront of developing the next-gen network, as it puts them in position to benefit from the Internet of Things movement.

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Nicholas Rossolillo owns shares of Verizon Communications and Walt Disney. The Motley Fool owns shares of and recommends Netflix, Verizon Communications, and Walt Disney. The Motley Fool recommends Comcast and T-Mobile US. The Motley Fool has a disclosure policy.