Layer3 TV has arrived in the Washington DC area. Whether the company wants to call it an official launch or a pre-launch test (it's been called both), the pay-TV service is now available for purchase in several areas around the District at a promotional price of $79 per month for the first 12 months.
After following recent reports of Layer3 TV's arrival in DC, I did some online and in-person research for myself. Although my town in suburban Maryland wasn't referenced as a market with availability, it turns out that yes, I can get Layer3 TV for my home. Or at least I could if I subscribed to the right broadband provider.
Here's how the system works. Layer3 TV is making interconnection deals with ISPs in order to offer its product -- a full-featured traditional video bundle with additional integrated content from over-the-top video services and social media platforms -- as an over-the-top video service. The company has claimed in several cases that it is not delivering an OTT product, but that's only true when and where Layer3 TV owns its own delivery infrastructure. Here in the DC area, Layer3 TV is an OTT service, which means usage also counts toward any broadband data cap.
The good news for consumers who want the Layer3 TV product is that the company seems to be having success getting the necessary broadband partnership deals done. The customer service representative I spoke to suggested that Layer3 TV won't stop with Comcast and Cox, and in fact is already working on trying to "knock out a deal" with my current provider, Verizon Communications Inc. (NYSE: VZ).
Now for the fun part. I didn't just want to talk to a service representative at Layer3 TV; I wanted to see the service and get a feel for it in person as a potential buyer. Luckily, Layer3 TV now has a kiosk set up at the Tysons Corner mall in Northern Virginia with information and a product demo. Many of the features on display have been talked about before, but there were a couple I wasn't aware of, and even more features that the site representative told me are in the works.
First, even though I knew Layer3 TV has the ability to support 4K Ultra HD content, I didn't know that it also upscales existing HD video for 4K displays. Second, somehow I missed the fact that Layer3 TV doesn't require a long-term contract. That's good news, but it also turns out that customers can suspend service for up to nine months, kind of like suspending your newspaper subscription when you're out of town.
Many of the other existing features are well known. Layer3 TV offers a personalized program guide that immediately displays the shows you're most likely to want to watch. Different members of the household can set up their own profiles, and the program search function accesses Internet services like YouTube in addition to traditional TV.
The channel line-up is at least as good as most cable TV bundles. It includes the broadcast networks plus a long list of additional cable and premium channels -- more than 200 channels in all, and all in HD. The DVR is a wireless set-top box and records up to eight shows at once and includes storage space for "up to 2,000 shows and movies."
According to my customer service rep, there are also a lot more features on the way. They include integration of Netflix and Hulu, new mobile apps for watching shows on the go, voice command support through the TV remote and channel information available through the small heads-up display on Layer3 TV's set-top. The company hasn't confirmed many of these features at a corporate level, however, so there's no guarantee they'll launch any time soon, if at all.
My concerns about Layer3 TV as a business remain the same as they've always been. Programming costs continue to rise, other cable companies are moving toward IP video -- potentially erasing Layer3 TV's early advantage -- and many younger consumers are shying away from expensive TV services in favor of skinnier, cheaper bundles. (See Will Layer3 TV Ever Launch?)
Fortunately for Layer3 TV, it has significant financial backing. Variety reports that the company has raised more $100 million to date from investors that include North Bridge, Evolution Media Partners, Altice and John Paulson's Paulson Co. However, just because a number of investors have sunk their money into Layer3 TV doesn't mean they'll make a return on their investment.
All of that said, as a consumer, I'm thrilled to have Layer3 TV as a new option on the table. More choice is always good. So far, Layer3 TV is available in Chicago as well as the DC area, and through a trial in parts of Texas. It's also said to be coming soon to markets in Denver and Boston.
IMPORTANT UPDATE: Multiple parties have now confirmed that Layer3 TV is being treated just like any other Internet service when paired with broadband from a company like Comcast or Cox. (An earlier version of the story said otherwise.) That means that any usage of Layer3 TV *must* count toward a broadband data cap. It also means that the service -- when paired with another ISP and not delivered over Layer3 TV's own infrastructure -- is an OTT service by definition. Additional editor's note: There continues to be debate over the definition of OTT, but the aspect of Layer3 TV usage counting toward a data cap is a distinct OTT characteristic.
Here is a statement from Layer3 TV: "Our interconnections with major ISPs are standard and no different than anyone else, and there is no 'sectioning off' of last mile bandwidth and our traffic is treated exactly the same in the last mile as everyone else. There is no special treatment of our traffic whatsoever when it rides on the Comcast or Cox networks you discuss in the article."
— Mari Silbey, Senior Editor, Cable/Video, Light Reading