T-Mobile is scrapping plan to offer TV service this year
T-Mobile US Inc. is delaying the debut of its much-anticipated video service after the project proved more complex than expected, according to people familiar with the situation.
The move would push back the rollout until 2019, though plans could still change, according to the people, who asked not to be identified because the situation is private. Chief Executive Officer John Legere had promised to deliver a "disruptive TV service" -- something that would upend the television industry -- and that high bar has made it harder to get the project done on time.
T-Mobile executives faced the difficult choice of either offering a garden-variety streaming platform -- a service that lets customers watch cable channels and other content online -- or waiting until next year to deliver a more groundbreaking product, the people said.
The holdup comes at an awkward time for T-Mobile, which is seeking regulatory clearance for its $26.5 billion acquisition of Sprint Corp. That deal would combine the No. 3 and No. 4 wireless carriers in the U.S., raising concerns that it will hurt competition. A whiz-bang video service was part of its plan to show that bigger scale could help it bring better products to consumers.
T-Mobile, based in Bellevue, Washington, declined to comment.
There is plenty of room to improve on the current state of pay TV, said Walt Piecyk, an analyst at BTIG LLC. So-called skinny bundles -- less expensive TV packages delivered online -- have helped shake up the industry, but customer dissatisfaction is widespread.
"The cable industry is plagued by poor customer service and excessive fees," he said. "It's ripe for a challenge."
To gain a foothold in the streaming-video business, T-Mobile acquired Denver-based Layer3 TV Inc. in January for $325 million. Layer3 has service available in a handful of cities, including Washington and Chicago, offering hundreds of channels for roughly $80 a month.
Since then, T-Mobile's Legere has been talking up plans for a new TV service. The brash CEO, known for his shaggy hair, bright pink shirts and social-media antics, has said that the product will "take the fight to big cable and satellite TV."
He faces a crowded field of would-be disruptors, including companies trying to disrupt themselves. AT&T Inc.'s DirecTV Now, Dish Network Corp.'s Sling TV and Google's YouTube TV are all trying to replace traditional cable with online services.
Beyond the current programming agreements held by Layer3, T-Mobile has been trying to gain new mobile-distribution rights, a process that's been highly complex every step of the way, according to the people familiar with the plan.
But positioning T-Mobile as a new TV challenger in the wings could play well with regulators, said Cowen & Co. analyst Colby Synesael.
"The Justice Department wants to see another competitor," he said.