T-Mobile (NASDAQ:TMUS) has decided to disrupt another industry. The company that forced its wireless phone rivals to abandon long-standing practices including contracts and overages will launch its own television service in 2018.
As part of its plan to bring its "Un-carrier" way of thinking to the television business, the company has purchased Layer3 TV Inc. T-Mobile CEO John Legere sees the cable industry in a similar way to how he views his wireless competitors.
"People love their TV, but they hate their TV providers. And worse, they have no real choice but to simply take it -- the crappy customer service, clunky technology, and outrageous bills loaded with fees," he said in a press release. "That's where we come in. We're gonna fix the pain points and bring real choice to consumers across the country."
What is T-Mobile doing?
The number three carrier in the United States, T-Mobile has been aggressive in making customer-friendly moves. These include the above-mentioned changes as well doing things like offering pricing that includes all taxes and fees. The company has added over one million customers for each of the past 18 quarters fueled largely by the company putting customer interests first.
The cable industry has many of the same problems Legere has fought against in the wireless space. In many cases, consumers pay for programming they don't want, face uncertain bills, and are locked into long-term contracts.
Legere pointed out in a video that accompanied the press release that more Americans are paying for TV than ever before even though cable has been losing customers. He did not offer many specifics as to how the new service would work, but he did use the word "disruptive" repeatedly. In addition, he noted that even consumers who leave big cable still have to deal with multiple accounts and log-ins.
He implied that the new service would allow consumers to access all of their subscription-based programming and free content through one interface. In addition, he acknowledged that the service would serve mobile users as well as people in their homes.
Layer3 currently offers an integrated login that allows customers to access multiple streaming services. Its service also integrates YouTube, Pandora, and a number of other apps. It can be controlled via Amazon's Alexa and Alphabet's Google voice assistant. The company does not require its users to sign a contract or make a long-term commitment.
Will this work?
"Together with T-Mobile, we're going to ditch everything you hate about cable and make everything you love about TV better," said Layer3 CEO Jeff Binder.
That sounds nice and T-Mobile has a customer base and a history of disruption, but the company won't be alone in trying to take on big cable. Services like DISH Sling and Hulu's live-streaming offering are already disruptive players in the pay-TV space.
T-Mobile, however, can both trade on the goodwill of its customers and leverage its wireless network. The company has been aggressive in offering video to its customers, including giving many of them Netflix for free.
Whatever its TV service actually looks like, it's very likely it will appeal to Millennials used to watching television on phones and tablets. Legere specifically mentioned that audience, while also noting that the new offering will also be available in homes.
Cord-cutting and people getting rid of cable (or never getting it at all) are still in the early stages. T-Mobile should be able to grab some of those customers by breaking industry norms and creating a better product for consumers.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Netflix. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.