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Will Layer3 TV Ever Launch?

Mari Silbey
4/11/2016

Layer3 TV wants to be a new kind of cable company. And after years of promising that launch day is just around the corner, the startup has now announced that it will kick off service in Chicago "in the coming months." In a profile piece on Wired, the company founders also say they will open for business soon in "a couple of other major cities on the East and West coasts."

But whether Layer3 TV can deliver on those promises is another matter altogether.

Co-founder Jeffrey Binder first promoted Layer3 TV's existence when he acknowledged on LinkedIn in late 2013 that he'd taken on a new CEO role. In multiple conversations following that revelation, I learned that Layer3 has created a video service that: combines traditional cable content with online video services; integrates social media platforms; supports Ultra HD/4K video; and includes a high-powered gateway device with wired and wireless routing, tons of storage, a speaker, microphone, small LED display, near-field communications (NFC) support, Bluetooth and Zigbee connectivity. (See Layer3 TV Preps for 'Umio TV' Launch.)

The company has also confirmed that it started service trials in late 2015 in two Texas towns under the brand name Umio. And, in a badly kept industry secret, Layer3 has been tied to Suddenlink Communications (recently acquired by Altice ) as a launch partner in those Texas markets.

The most interesting thing about Layer3 TV is that it's investing in last-mile infrastructure. Instead of delivering video over the Internet, it's using its own leased network to control quality of service.

So let's put all of those pieces together. Layer3 TV is combining infrastructure with big-bundle TV programming and a hub device in the home. You know who else did that? All of the cable companies now being driven toward broadband-only business models, or being bought up by Comcast Corp. (Nasdaq: CMCSA, CMCSK), Charter Communications Inc. and Altice. Oh, and Google Fiber Inc. Google Fiber's doing the same thing, except without a legacy network architecture and with a gigabit broadband service thrown in the mix.


For more on TV technology trends, check out our dedicated video services content channel here on Light Reading.


Here's why I'm skeptical of Layer3 TV. The company isn't doing anything radically different from its competitors, and it still faces many of the same challenges. Programming costs continue to rise, and consumers don't want to pay a big monthly fee for TV service. (Layer3 TV's product is expected to cost between $80 and $150 per month.) Yes, the startup potentially has an advantage in basing itself on IP delivery while also controlling its own infrastructure. But that's a distinction that won't last, and if Layer3 doesn't move quickly, it won't be able to claim any kind of first-mover advantage. Comcast has already transitioned a significant percentage of its video delivery system to IP, and virtually every other major cable company is at least trialing IPTV services.

Cable companies may not be able to move as quickly as Layer3 TV claims it can, but Layer3 does not have the scale or footprint of its cable competitors. And on the other end of the spectrum, plenty of Internet companies can turn on a dime, offering cheap video services with rapidly updating features... if not the picture quality and breadth of content that Layer3 is promoting.

In short, Layer3 TV is walking a very fine line between big cable and over-the-top video. The only way I believe it can win in the market is with flawless execution. And unfortunately, there's no evidence that execution is something the company can do. After two years of promising a launch, the "any day now" line is wearing a bit thin.

It all leaves me to wonder if Layer3 TV will be the next big thing, or just the next Joost or Sezmi -- a company that promises to revolutionize TV only to deliver too little too late.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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ITProjec39942
ITProjec39942
11/16/2016 | 9:54:31 PM
its seems everybody including the author misses the point
Mr. Padden, its seems everybody including the author misses the point. I'm down in Texas where the Umio product is being offered. its clear that maybe you and the author think everybody is a twenty or thirty something, single person that wants to only watch five channels on a computer and save money.  We havent had a new cable service here in over a decade, and I find it amusing that tech folks think there is some magic wand a company like ATT is going to wave and suddenly become Tesla.  I'll bet Tesla is quaking in their boots over how Fiat is going to eat there lunch.  I wish I could get the Umio service but can't get it because its not in my part of Houston, and its been here for months so I have no idea what you and the author are talkong about in saying it hasint launched.  I'm paying more than $200 for internet and cable now, bursa kerja loker and I'd gladly pay $80 if that s what it costs.  I guess you wnat to pay $20, I'd be thrilled with 80 and not having to deal with the same old company that never changes anything. 
craigleddy
craigleddy
4/12/2016 | 4:57:45 PM
Re: Layer3
I'm fuzzy on the math here. If I become a Layer3 customer, do I still have to pay my cable company/ISP for a monthly fee for an Internet connection? If so, then layering $80-150 for service on top of that won't give Layer3 any price advantage. Or is the business model to partner or lease Internet capacity from cable companies and bake that cost into their service package for customers? 
bornstein63
bornstein63
4/12/2016 | 3:42:40 PM
Re: Layer3
Mr. Padden, its seems everybody including the author misses the point. I'm down in Texas where the Umio product is being offered. its clear that maybe you and the author think everybody is a twenty or thirty something, single person that wants to only watch five channels on a computer and save money.  We havent had a new cable service here in over a decade, and I find it amusing that tech folks think there is some magic wand a company like ATT is going to wave and suddenly become Tesla.  I'll bet Tesla is quaking in their boots over how Fiat is going to eat there lunch.  I wish I could get the Umio service but can't get it because its not in my part of Houston, and its been here for months so I have no idea what you and the author are talkong about in saying it hasint launched.  I'm paying more than $200 for internet and cable now, and I'd gladly pay $80 if that s what it costs.  I guess you wnat to pay $20, I'd be thrilled with 80 and not having to deal with the same old company that never changes anything. 
msilbey
msilbey
4/12/2016 | 10:19:10 AM
Re: Layer3
Certainly Layer3 has significantly more knowledge and experience with how the cable industry works than Apple and other Internet folks (although the Internet companies are learning). However, I'm not convinced that the company is going to add enough value to the big bundle to convince a large number of subscribers to sign up. (Nobody has yet proven that viewers care about getting a Twitter stream on their TV) High-cost, big-bundle options already exist and are getting better, albeit slowly. I think it'll be tough for Layer3 to overcome consumer inertia fast enough to outpace the changes taking place in cable given that there is also massive innovation taking place in the OTT space.

I'm happy to be proven wrong on this one, but I think Layer3 has picked a difficult time to try to scale up a cable business.  
Preston Padden
Preston Padden
4/12/2016 | 9:58:43 AM
Re: Layer3
it is not my place to divulge Layer3's game plan. But as the former President of the ABC Television Network I have followed carefully the so far unsuccessful efforts of Apple and others to launch new television distribution platforms. I believe that Layer3 has crackled the code on next generation cable. Their unique approach is making great progress in securing programming rights and in technology development.
msilbey
msilbey
4/12/2016 | 9:43:13 AM
Re: Layer3
Why is that? Curious to hear your take.
Preston Padden
Preston Padden
4/12/2016 | 8:34:35 AM
Layer3
Contrary to the skepticism in this article, I believe that Layer3 has cracked the "secret sauce" that has eluded others who have tried to launch the next generation of cable TV.
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