T-Mobile USA’s decision to line up with Google for TV, just six months after launching its own video streaming service, is more than just a local response to problems with its software supplier MobiTV. The partnership also ranges over 5G, and especially messaging, in a bid to compete with the serious big hitters on both fronts.
The common factor between the two is that T-Mobile wants to regain possession of its subscribers so that it can derive extra revenues, rather than having them leak away to providers of over-the-top services such as WhatsApp for messaging, or Amazon Prime Video for media entertainment.
Like MNOs the world over, T-Mobile does not want to be relegated to mere provider of mobile connectivity and devices with limited scope for added revenue generation. This was a primary motive for T-Mobile’s launch of three TV channels – Live, Live+ and Live Zone plus an entry level bundle – under the banner of TVision, in October 2020. A lot of work had gone into pricing and amassing a competitive range of content, with the basic TVision Zone ‘skinny bundle’ at $10 per month including channels from AMC, Discovery, Viacom, and Hallmark. While excluding both local programming and premium sports channels such as ESPN, FS1, or NBCSN, it was one of the cheapest packages in the US for live entertainment only.
This could be upgraded to TVision Live at $40, adding local ABC, Fox, NBC and Telemundo affiliates, and on further to TVision Live+ at $50 per month bringing in NBC-owned regional sports networks like NBC Sports Philadelphia AND NBC Sports Washington. Finally at $60 a month TVision Zone adds some more sports content such as Longhorn Network, MAVTV, NFL RedZone, Outside Television and family channels such as Universal Kids.
These have all been withdrawn as of April 29 2021, which might seem premature after all the fanfare accompanying the launch. The precise timing was probably dictated by problems besetting MobiTV, which had just filed for voluntary Chapter 11 bankruptcy protection.
This much was admitted by T-Mobile US CEO Mike Sievert in a blog post, writing: “…With our TV software provider encountering some financial challenges and with our broader, strategic partnerships with Google and Philo, we saw an opportunity to deliver unique value to our customers.”
But the U-turn over TV would have happened anyway and may even have occurred close to the same time because it coincided with the other part of the announcement, alignment around Google Messages app as the default messaging system for Android devices supplied or serviced by the operator.
But to finish first on the TV front, T-Mobile had concluded MNOs would generally face an uphill battle to win over their subscribers’ eyeballs against the big OTT platforms and so decided that if it could not beat them it would join up with one of them.
We have already seen other super-Tier 1s in various countries edging in this direction, recalling that in July 2020 Vodafone became the first UK telco to offer a choice of Amazon Prime’s full suite of benefits as well as Google’s YouTube Premium as part of a mobile plan. It had already brought in Spotify Premium, Now TV Entertainment Pass and Sky Sports Mobile TV. This confirms an emerging direction for mobile operators as they enter the 5G era of seeking to become universal portals for critical services, which means for TV becoming content aggregators.
T-Mobile has gone further than most other telcos so far by effectively outsourcing TV service provision to Google. But there is another wrinkle in that the entry level bundle is coming from a separate partnership with Philo TV, owned by several companies, including A&E, AMC Networks, Discovery and ViacomCBS, whose content it offers.
This makes it quite similar to T-Mobile’s retiring Zone entry bundle and is the same price at $10 per month. However, the premium YouTube TV offered by T-Mobile at $55 per month, discounted by $10 on the standard price, is itself performing the aggregation that T-Mobile knew it needed to be competitive. In the US, YouTube TV acquired Turner channels in 2018, then various local channels as well as the Discovery network in 2019, followed by Viacom channels including Comedy Central and VH1.
As the content accumulated, so Google hiked the price of You Tube TV, which is quite distinct from the ubiquitous free YouTube. Ironically, T-Mobile itself positioned its premium bundles as being alternatives to YouTube TV at a slightly lower price. Now it has secured a discount on YouTube TV for its own service, and it will be interesting to see whether prices continue to drift up as further content gains are made. That would fulfil the prediction that consumers, by cutting the cord to save money, will end up almost where they started once they have access to the same aggregated content that traditional pay-TV operators used to provide.
The other significant aspect of the TV story here is that T-Mobile has given the Android TV platform a major endorsement in the USA by moving over to Google. Until now Android TV has struggled to gain the same ground in the US as it has in other regions, especially in Europe, and this deal also serves to underline T-Mobile’s rising status in the US after its acquisition of Sprint. The deal can be seen as a scalp for Google as well as T-Mobile.
The messaging side of the story though is at least as big from a mobile perspective. Under the deal, T-Mobile will make Google Messages the default messaging system on all Android devices, including support for Rich Communication Services (RCS). This brings the sort of features enjoyed by users of the principal OTT alternatives, primarily Facebook’s WhatsApp and Messenger in the US, along with Apple’s iMessage. Such features include chat over the network or WiFi, sharing high resolution photos, and participating in more dynamic online chats.
T-Mobile has been offering Google Messages since 2015 but until recently it has posed little serious competition to the rampant WhatsApp, for several reasons but primarily inferior functionality and security, as well as poorer marketing.
In the beginning, after its launch in February 2009, plain old SMS still predominated for messaging. WhatsApp then gained rapid traction by allowing users to exchange richer messages and send data over WiFi at a time when texts were still usually charged for in some form. Group chats, voice calls and then video swiftly followed, provoking Google to respond with support for RCS from 2018. As Google rolled this out to many countries as well as offering richer functionality, it gained ground and passed thebn-installs mark early in 2020.
Meanwhile, Apple had also responded two years after the WhatsApp launch by entering the rich messaging field with its iMessage in 2011. This suffered from the perennial Apple problem of being confined to the vendor’s ecosystem, which was circumvented by integrating with SMS on the phone for interoperability with other platforms. This achieved some take up among Apple users.
But then WhatsApp played another trump card in April 2016 by implementing end to end encryption. This was a big deal because it meant users really could send messages with security not just against fraudsters but also governments, which became a bone of contention itself for criminal investigation and counter terrorism. From then on messages could be secured in such a way that the recipient at the end held the decryption key, so that not even Facebook itself could eavesdrop.
It is true that iMessage also offers end-to-end encryption, but again only within the Apple ecosystem, since SMS cannot support it. Google had adopted an upgraded version of SMS for interoperability so that it could work with operators rather than providing Android with an equivalent to iMessage working on top. As a result, messages were encrypted between user devices and Google’s servers, but not over the whole path necessarily.
Google has therefore come under huge pressure to match WhatsApp by offering full end to end encryption between communicating devices, with no scope for decryption in between. Finally, in November 2020, Google started beta testing of end to end encryption, starting with one-to-one messages, promising that would make it impossible for any party including itself to eavesdrop.
End to end encryption raises other questions, such as how to moderate shared messaging content effectively and how to provide access for law enforcement, but these are still subject to research and debate.