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5 December 2019

Legere leaving could mark beginning of the end for TVision

As T-Mobile USA’s 5G network went live this week, and so too did the cable fun-poking, Faultline pondered once more – perhaps for the last time – whether the impending departure of the eccentric and often petty CEO John Legere signals the end of the Uncarrier’s TV plans.

T-Mobile has been an advocate for aggregation and has been pretty damn successful at it to date, yet even the launch of its long-awaited Layer3-powered DTH service TVision back in April arrived with little fanfare. Surely then, it’s only a matter of time before T-Mobile cans TVision and sets it sights on being the greatest MNO aggregator of them all, with a home broadband business to match.

As cable operators increasingly rely on selling high-speed internet services to offset eroding pay TV subscribers and freefalling landline connections, these ISPs have inadvertently entered a battle for aggregation to diversity their packages. Similarly, the MNOs too have become content aggregators.

The next step, particularly in densely populated cities, is a war of broadband – with T-Mobile marketing its 5G wireless service as a replacement for fixed line broadband.

There are two very different 5G strategies here. While T-Mobile wants to disrupt the fixed infrastructure market by pushing 5G as a direct replacement for broadband, AT&T and Verizon are looking to bundle fixed line connections with 5G services. There are huge backhaul benefits for AT&T and Verizon via this approach, particularly with Verizon’s aggressive fiber plans, while T-Mobile will harness Sprint’s extensive 2.5 GHz spectrum holdings.

In a market where 3.5 GHz – the main band being used internationally for early 5G capacity-driven roll-outs – is available only on a limited basis via the CBRS scheme, US MNOs are being driven up into the more challenging millimeter wave bands to deliver very high speeds to support services like home video. Sprint is the only major operator with significant chunks of mid-band spectrum, and its 2.5 GHz band, while originally used for 4G, has been designated for 5G also. If T-Mobile can combine 2.5 GHz, 600 MHz, and its own early deployments in mmWave, it will have an ideal mixture of capacity and coverage support.

We shouldn’t forget though that cable has a substantial head start and is already well ahead with its 10G plans. Cynics will say 10 Gbps is excessive and an excuse to charge consumers and businesses more for broadband, we say that these guys are correctly looking at the insane demand for online content and changing formats, and laying the foundations for it to thrive.

In MDUs, however, replacing fixed broadband with a 5G home wireless hub will become a compelling option in the coming years. The ability to then bundle streaming services with connectivity could decimate the cablecos which have monopoly ownership over MDUs.

Legere has taken countless jibes at his MNO rivals, even where content is concerned. He recently ridiculed Verizon’s offer of a one-year free subscription to Disney+, calling it out as a copycat. “The VP of copy and paste at Verizon looked over at our Netflix on Us success and did a horrific job of recreating it – and last time I checked 9 out of 10 people who watch Disney cartoons don’t make wireless decisions,” said Legere. We find Legere’s comments amusing because Faultline floated the idea of T-Mobile USA partnering with Disney+ over a year ago, and clearly the departing CEO is furious that Verizon beat him to it.

His replacement Mike Sievert, currently COO at T-Mobile, is decidedly less provocative, while Legere hasn’t said yet what his next move will be. It will be interesting to see if T-Mobile under Sievert’s leadership will continue to express willingness to invest in content. Its most recent gamble was through a partnership with short-form mobile-first video service Quibi (née NewTV) only a few weeks ago.

Ironically, in T-Mobile’s pursuit of aggregation, results from a year-long study conducted by the Northeastern University and University of Massachusetts Amherst, published in summer 2019, identified T-Mobile as one of the most prevalent throttlers of Netflix.