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Layer3 TV Comes to Town, Hints at Future

Mari Silbey
10/21/2016
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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).


Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.


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.

Static Layer3 TV demo
Static Layer3 TV demo

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.

Live Layer3 TV demo on a tablet
Live Layer3 TV demo on a tablet

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.

Layer3 TV demo plus remote
Layer3 TV demo plus remote

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

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Solution16553
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Solution16553,
User Rank: Light Beer
12/11/2016 | 5:54:18 PM
Re: Incorrect characterization...
Chiefexe79184, It sounds like you are affiliated with Layer3. You mention Layer3 nertwork. Where is that available? It appears to me that my only choice in the Western suburbs of Chicago is Comcast, and their 1TB cap bothers me.
KBode
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KBode,
User Rank: Light Sabre
10/24/2016 | 4:03:12 PM
Re: Incorrect characterization...
I'd agree. And while that's less of a problem when you're paying less money for something like Netflix, it seems much more important when you're pitching consumers a $100 cable replacement where quality is a priority. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
10/24/2016 | 1:07:51 PM
Re: Incorrect characterization...
I think it's great to see there are increase options for video subscriptions - and not just cable. That being said, I am starting to get a bit concerned these services are going to hit broadband data caps. They are data-intensive, and almost every broadband company has a cable offering they'd rather not be impinged upon. 
jbtombes
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jbtombes,
User Rank: Light Sabre
10/24/2016 | 10:09:17 AM
Re: Layer3 TV MVPD service isn't OTT
Yes, there's some confusion in the term. One understanding would designate OTT when video, audio, etc. is delivered via Internet without an MSO or MVPD involved. But if Layer3 qualifies as one of those entities, in controling and distributing the content, is it no longer OTT? Likewise, when an MSO launches on-demand or linear programming "over the top" of its own insfrastructure, is that OTT? Or is OTT simply the delivery of IP packets, regardless?
msilbey
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msilbey,
User Rank: Blogger
10/22/2016 | 4:57:04 PM
Re: Layer3 TV MVPD service isn't OTT
If it travels over the open Internet in the last mile, I don't see how it can be anything but. Netflix also maintains video delivery infrastructure, but it's still an OTT service. Perhaps the definition of OTT is the problem here. 
ChiefExe79184
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ChiefExe79184,
User Rank: Light Beer
10/22/2016 | 1:15:07 AM
Layer3 TV MVPD service isn't OTT
The author's description of Layer3 TV as an "OTT" service is not accurate. 
msilbey
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msilbey,
User Rank: Blogger
10/21/2016 | 3:12:56 PM
Layer3 TV as an OTT service
Now that we know Layer3 TV is an OTT service - at least in the DC area - broadband data caps become an issue. Streaming Netflix is one thing, but streaming an entire line-up of TV strikes me as a bigger concern for consumers. I wonder how Layer3 plans to address.
mendyk
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mendyk,
User Rank: Light Sabre
10/21/2016 | 2:32:44 PM
Re: Incorrect characterization...
It would be helpful for Layer3 to spell out exactly how its service works. Given the choice between clear guidance and speculative "characterizations," reporters will opt for the former. It's easier and it serves the purpose. In this response, for instance, the phrase "may or may not be given priority" could use some clarification.
ChiefExe79184
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ChiefExe79184,
User Rank: Light Beer
10/21/2016 | 1:00:14 PM
Incorrect characterization...
The article is incorrect in several areas, one of which relates to network traffic. As of today, once on the last mile network of an ISP other than Layer3, Layer3 traffic is given no special treatment or exemption - there is no "sectioning off". The last mile networks of most major ISPs are more than capable of handling robust video services, including those of Layer3, without the need for any special treatment or "sectioning off".  Of course when on a Layer3 network, there are never any data caps and our traffic may or may not be given priority.  Maybe that is where the confusion set in as there are some locations where Layer3 is building out ISP services and is available on private IP networks. 

We are making doubly sure our reps give all our customers correct information, but unfortunately, when reporters who are searching for a story craft questions in a way to get an answer that a independant sales rep doesn't actually have, or understand the actual question being asked, the reporting isn't always correct.  All that aside, welcome to Layer3 and if the way we work with a given ISP changes, as a customer you'll be the first to know!
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