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What is Layer3 TV and why is T-Mobile buying it?

T-Mobile announced it’s planning to launch its own streaming TV service next year, but it’s not going about the task alone. The company is acquiring Layer3 TV to help build the service, catapulting the relatively small cable company into the national spotlight.

Layer3 TV isn’t the most well-known cable company. It’s only available in a few cities, including Chicago, Washington DC, and LA, and it lacks the kind of brand recognition of major players like Comcast or Verizon, or even more local brands like Optimum, RCN, or Spectrum. So what makes Layer3 so important that T-Mobile wants it to be the backbone of this upcoming TV service?

In a word: bandwidth. Layer3 resembles a regular cable company in a lot of ways: you get a fiber optic cable hookup for your house, which you wire up to your cable box. But the signal you get is encoded with internet protocol, similar to how Netflix sends video, instead of the radio frequency-based system that most cable technology is based on.

Layer3 isn’t using the internet that you use when you pay Comcast or Verizon. It runs its own, private IP network to directly serve users content. That means that Layer3 can manage your content and bandwidth directly, without having to worry about a middleman network throttling your data, or congestion slowing down your speed. According to an interview with Wired last year, Layer3 is also better at transmitting HD video than most other services. Its CEO Jeff Binder claims that the company can send HD video at a bandwidth of less than 4 megabits per second.

In addition to the IPTV technology, Layer3 has also taken a modern approach to putting together a TV service in this day and age of Netflix, YouTube, Hulu, and Amazon Prime Video. The Layer3 box integrates content from those services alongside DVR recordings and Layer3’s own on-demand content, and it learns what you watch over time to offer better curated suggestions. The device is compatible with Alexa and Google Home for voice controls, and along with the main cable box, the Layer3 offers wireless breakaway boxes that make it easy to access content in other rooms without having to split your signal or lay out a coax line.

A lot of this won’t necessarily apply to T-Mobile’s new service. Presumably, the company won’t be laying down its own nation-wide fiber network to take on Comcast in the same way that Layer3 was doing before it was acquired.

But if you consider that T-Mobile is buying an internet-focused TV company that already has experience in encoding live video for streaming over a privately managed network — one that, if not quite the same thing as T-Mobile’s wireless network, certainly bears some parallels in overwatch strategy and execution — it could add up to the self-dubbed “Uncarrier” having something interesting on its hands when it launches its service in 2018.

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