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T-Mobile Jumps Into Internet TV Arena With Layer3 TV Acquisition

T-Mobile plans to launch an internet-delivered television service across the U.S. in 2018, and is acquiring startup Layer3 TV to bring out yet another competitor to traditional cable and satellite TV services.

Financial terms of the deal were not disclosed. Layer3 TV, founded in 2013, had raised about $80 million in total funding.

“People love their TV, but they hate their TV providers,” John Legere, president and CEO of T-Mobile, said in announcing the deal Wednesday. “We’re gonna fix the pain points and bring real choice to consumers across the country.”

T-Mobile didn’t provide any details about what its forthcoming over-the-top TV offering will look like or what it will cost. Mainly, the company’s announcement focused on trash-talking incumbent “Big Cable and Satellite TV” and asserting that the market is ripe for disruption. That posture is consistent with T-Mobile’s marketing itself as the “Un-carrier,” which tries to position the wireless carrier as having more consumer-friendly offerings than bigger rivals AT&T and Verizon.

Layer3 TV’s broadband-delivered subscription TV service is currently available in five U.S. cities: Denver (where the company is based), L.A., Chicago, Washington D.C., and Dallas/Ft. Worth, Texas.

T-Mobile said that until the deal closes, there will be no changes to Layer3 TV’s operations but indicated the existing service will be superseded by something else. “Layer3 TV has a great solution today, but we plan to introduce something new, leveraging the awesome talent and tech at Layer3 TV,” a rep for the carrier said.

The new TV service will not be limited to T-Mobile’s network, according to the carrier. “It’ll work on any internet-connected device you have and any internet connection you have,” a T-Mobile spokeswoman said.

The planned T-Mobile TV service will join a host of other “virtual” internet TV services. Those include AT&T’s DirecTV Now, Dish Network’s Sling TV, Google’s YouTube TV, Hulu’s live TV service, Sony’s PlayStation Vue, Philo (backed by ear: A+E Networks, AMC Networks, Discovery, Scripps Networks, and Viacom), and FuboTV.

The current Layer3 TV services is not a “skinny bundle” by any stretch. The company offers a baseline package priced at $75 per month with more than 275 HD channels, the ability to DVR up to eight shows at once, and access to apps including YouTube, Facebook, iHeartRadio and Pandora.

Leading up to throwing its hat into the “virtual pay TV” ring, T-Mobile has made several moves in mobile video, looking to lure subscribers as growth tapers off in the competitive wireless sector.

In September, T-Mobile launched a partnership with Netflix to offer family-plan unlimited subscribers Netflix’s standard HD two-stream service (normally $10.99 per month) for no extra charge. In 2015, the carrier in 2015 launched Binge On, providing users on data-capped plans unlimited streaming access through partnerships with video and music services without incurring overage charges. T-Mobile has since moved to offer only unlimited-usage plans to new customers.

On a separate front, T-Mobile had been in merger talks with Sprint for several months, as the No. 3 and No. 4 U.S. wireless providers (respectively) were looking to join forces and take on AT&T and Verizon. But the they couldn’t agree on which party would have controlling interest in a combined entity, and T-Mobile and Sprint announced that they ended the discussions in November.

Layer3 TV’s investors include Evolution Media — whose shareholders include TPG Growth, CAA, and Jeff Skoll/Participant Media — Paulson & Co., France’s Altice, and North Bridge Venture Partners. The company was founded by cable veterans Jeff Binder, who founded VOD systems company Broadbus Technologies, and Dave Fellows, previously CTO at Comcast and AT&T Broadband.

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