Pay TV is starting to shrink. And T-Mobile needs to grow its network. Put those two things together, and it's easy to see why Dish and T-Mobile are reportedly in discussions to merge. But will combining the fourth-largest carrier with the second-largest pay TV provider be a win for consumers?
People who have pay-TV service are starting to cut back, and young folks who never had cable or satellite TV may never get it. Dish is aware of these trends, which is why it jumped into online TV back in March with its Sling TV service, a $20 monthly basic channel package with upgrade options.
Dish has also bought a lot of wireless spectrum licenses from the U.S. government in the past year. Why does a satellite-TV company need cellphone bandwidth? To start going beyond the satellite TV business.
T-Mobile, meanwhile, needs some way to grow. It has to improve coverage and keep up with the growing demand for mobile data — which video voraciously consumes. T-Mobile probably wants data bandwidth a lot more than it wants to go into the TV business, said Avi Greengart, director of research at analyst firm Current Analysis.
"That's not to say that a large, established telecom company doesn't see value in owning a TV system," Greengart told Tom's Guide. "But for T-Mobile, the value here would be in adding additional spectrum."
T-Mobile also gets revenue to fund its plans. "[The pay TV] business isn't growing, but it's still profitable. Dish spins off cash flow, and that's good for any business," Greengart said.
That could be good news for cellphone owners, no matter how they use their data plan, since T-Mobile has distinguished itself from its bigger competitors, AT&T and Verizon, by offering budget pricing. T-Mobile is "changing the terms of engagement with consumers around their wireless plans," Greengart said. In other words, it's shaking up the business.
The one way in which T-Mobile may become a TV company is by providing more bandwidth for you to watch TV online. People are already moving quickly to mobile video. Adobe just reported that Americans are watching 22 percent more video on smartphones than they did last year, and that 38 percent of all videos people click on are on smartphones.
"Seems to me that the business of distributing TV is increasingly about distributing mobile video over IP. Something DISH doesn’t really do, and T-Mobile does," Jeremy Toeman told us. Toeman has been in the TV and online TV business for over a decade, working with companies including Sling Media (makers of the Slingbox), Boxee, Vudu Dropcam and Sonos.
T-Mobile doesn't have to be a TV company to take advantage of this, Greengart said. "Consumers are creating their own demand for mobile video around social media and YouTube, and of course over-the-top services like Netflix or Sling TV," Greengart said. "Any TV content that [T-Mobile] adds to their wireless offerings would be gravy."
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