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Layer3 TV: An In-Footprint Alternative?

Next-gen MVPD has potential to give providers a ‘flanker brand’ for TV 5/08/2017 8:00 AM Eastern
Layer3 TV's technicians roll around the market in all-electric cars from Tesla (pictured) and BMW.

Let’s face it, there are consumers out there that will never, ever take a pay TV service from an incumbent cable operator.

Even the loudest, screaming call to action or best deal won’t get them to budge, because the hate level is simply too great to overcome. Or maybe the local pay TV operator’s brand has simply exhausted itself, and consumers have become blind and deaf to their marketing overtures.

But what if there’s a new pay TV provider in town — a new brand even — that strives to shake off cable’s longstanding stigmas by giving the customer the white-glove treatment, along with a fresh, new service that delivers a full-freight lineup of live TV and a massive VOD library that comes by way of fancy, colorful boxes outfitted with an intuitive, sharp-looking guide that even integrate Netflix and other popular OTT services and apps?

And so what if it’s all riding the incumbent internet-service provider’s broadband pipes? That’s just data. Everything else is new, new, new — down to the electric Teslas and BMWs that the field technicians and service installers use to roll around town.

It’s looking more and more likely that such a scenario could be playing into the strategy of Layer3 TV, the Denver-based IPTV service provider that bills itself as “The New Cable.”

Though Layer3 TV is leaning on a direct-to-consumer play in most of its launched markets, it’s becoming increasingly likely the company will also lean on deals with incumbent MSOs and telcos that could use its TV service as a “flanker brand” that enables them to gain video homes while also adding or retaining valuable, higher-margin broadband subscribers.

Layer3 TV and Suddenlink Communications (now part of Altice USA, which inherited Suddenlink’s investment in Layer3 TV) tested the idea starting in late 2015 in a couple of Texas markets, using the “Umio TV” brand.

Though that trial has since ended, a similar idea appears to be underway in Washington, D.C., where Layer3 TV is using the fiber network of incumbent telco Verizon Communications to market a broadband bundle as well as a standalone broadband service.

Neither side is commenting on the relationship, but people familiar with the linkage said the broadband component of Layer3 TV’s offer in the market (branded by Layer3 TV as “pure-Fiber”) does indeed run on the Verizon’s network. And while Verizon would perform the connection to the exterior of the customer’s house, Layer3 TV would handle everything else, from service activation to billing to customer care.

Financial terms of the agreement aren’t yet known, but it gives Layer3 TV the important ability to sell a broadband service without owning the access network. Verizon, meanwhile, is providing consumers in that market a pay TV option that is not Fios TV. Even if Verizon cedes a pay TV subscriber to Layer3 TV, Verizon still gets a broadband sub out of the deal, and prevents that customer from falling into the hands of Comcast or RCN.

Among other examples, Layer3 TV also has a service/bundling partnership with NextLight, a municipal fiber broadband provider in Longmont, Colo.

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