Bucking a trend toward “skinny” pay TV bundles that appeal to millennials and other cost-conscious consumers, Layer3 TV is shooting for the high end of the market with a full-freight video offering affixed with bells and whistles.
Following some earlier trial work in two Texas markets, Denver-based Layer3 TV launched its first commercial service in the Chicago area over the Labor Day weekend, led by a baseline package that features more than 200 HD channels and starts at about $75 per month.
Its baseline “allHD Platinum” includes local broadcast TV feeds along with access to a traditional slate of national cable networks such as AMC, CNN, Discovery Channel, Disney Channel, IFC, TBS and The Weather Channel.
Layer3 TV is complementing that with a small batch of a la carte offerings, three thematic add-on tiers (Sports & Info Plus, Movies & Music Plus and En Español Plus), and premium multiplexes from Epix, HBO, Cinemax and Showtime, with Starz among those that are noticeably missing from the initial mix.
While Layer3 TV does not own last-mile networks (see sidebar), it provides most other elements one would expect from a traditional cable operator, including the installation, the in-home equipment and the guide/user interface, and the billing and customer care that underpins the service.
Say goodbye to the “truck” roll — Layer3 TV’s field techs will be rolling around in electric-powered BMW i3s.
Layer3 TV is delivering service on a high-octane, 4K-capable gateway that works with smaller client boxes that provide the same functionality as the main device. Layer3TV chief content officer Lindsay Gardner said Layer3 TV has also locked in content rights for TV everywhere, “Look Back” and “Start Over” services that will be activated in the coming months.
The company is complementing its main video offering with integrated over-the-top and social media services, including YouTube and Facebook, and is expected to expand that slate in the coming months. Layer3 TV is also readying the launch of its first full-time 4K channel and plans to offer VOD fare in the new format from several major programmers.
“It’s concierge cable,” summed up Gardner, the industry vet who has spent about two years securing the company’s carriage deals.
But the big question now is whether enough consumers will opt for Layer3 TV’s big bundle and white-glove approach. As pay TV numbers continue to slip (Leichtman Research Group said the top U.S. pay TV providers lost 665,000 subcribers in Q2), traditional operators such as Comcast, Verizon and Dish Network have tried to bridge the gap with skinny bundles or specialized streaming services aimed at consumers who have cut the cord or are at risk to do so.
Layer3 TV: We’re Not OTT
Since the beginning, Layer3 TV has insisted that it is a facilities-based provider of a managed IPTV services and is not an “over-the-top” video offering akin to the delivery methods employed by virtual MVPDs like Sling TV and other types of online video providers.
While that’s up for debate, Layer3 TV does appear to represent a different kind of animal, neither fish nor fowl.
Traditional MSOs rely on headends to deliver service to the home, and even those architectures have morphed into large IP-collectors that feed content to their markets on big backbones and regional networks. Online video providers, meanwhile, use public and quasi-private content delivery networks that may or may not have interconnection deals with ISPs. However, those online services travel the public Internet on their way to those markets.
Layer3 TV has leased its own 12,000-mile fiber backbone to connect its Colorado-based network operations center to the communities it serves, meaning it’s not travelling the public Internet but rather a dedicated, secure IP transmission path, according to Wired’s profile of the MVPD published earlier this year. In that sense, Layer3 TV is trying something unique in how its signals are managed before they reach the access network.
The company has also worked out interconnection/peering deals with local providers, including multiple tier-1 service providers in multiple markets, to deliver its service to customers, according to sources familiar with Layer3 TV’s architecture. That, they said, gives Layer3 TV a way to a level of quality service and security that most OTT video services don’t have.
Once those signals get to the local access network, they will travel a cable operator’s DOCSIS data network, sitting next to public Internet traffic, to the home and connect to Layer3 TV’s gateway.
In Chicago, Layer3 TV’s first market, Comcast and RCN are the primary cable operators. And Layer3 TV has relationships to both of them. For example, David Fellows, Layer3 TV’s co-founder and chief technology officer, is the former CTO of Comcast. RCN, meanwhile, was recently acquired by TPG Capital, which also happens to be an investor in Layer3 TV.
Layer3 TV, though, insists that it has not secured any “special” deals with cable operators, characterizing those interconnection agreements as standard.
Notably, a Layer3 TV customer in Chicago will still need a separate broadband service.
But that might not always be the case. In Midland and Kingwood, Texas, where Layer3 TV is conducting a trial with Suddenlink under the “Umio TV” brand, a broadband service isn’t required. It’s possible that a customer can get DSL from CenturyLink, for example, and buy Umio TV separately.
And that adds to the intrigue about potential service delivery options for Layer3 TV. Suddenlink is now part of Altice USA, which has also acquired Cablevision Systems. Altice is reportedly an undisclosed investor in Layer3 TV, which has raised about $100 million. Layer3 TV and Altice have declined to comment on their business relationship.
Layer3 TV has not announced when or where it will launch service next. However, it has job openings for installation supervisors in Denver, Houston and Washington, D.C.
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