"Binge On" is a Harbinger of Things to Come

Nobody yet knows whether the T-Mobile US “Binge On” feature, allowing customers to stream entertainment video without incurring usage on their mobile data plans, is going to crash the T-Mobile US network, or not. T-Mobile obviously believes it can handle the traffic.

But the move, in some ways, only presages an inevitable evolution of the mobile business and networks. Recall that the reason Dish Network has assembled a mobile spectrum portfolio is that it wants to be a player in the mobile business, specifically wit competence in entertainment video.

Verizon is spending so much effort on mobile streaming (Go90 service, purchase of AOL) because it also believes the future of entertainment video is mobile.

T-Mobile might be early. T-Mobile might encounter network congestion issues. But T-Mobile likely is not at all wrong about the direction of mobile revenue growth, and the services that drive it.

If there is anything like a “killer app” for smartphones and Long Term Evolution, it is video. That is not to downplay the importance of carrier messaging and voice, instant messaging, music, games, email  or Internet access in general.

It is simply to say LTE was the first generation of networks to have the ability to support lots of consumer video streaming, in terms of quality of experience.

So far, mobile has become a substitute for fixed voice and Internet access. What comes next is the ability to substitute mobile for entertainment video access, a product that fixed networks continue to excel at providing.

The cost of mobile bandwidth (dollars per gigabyte) has been a major barrier to fuller substitution of mobile for fixed service consumption. “Binge On” is an early step towards erasing a goodly part of the fixed network advantage.

To the extent that Internet access drives the immediate next phase of revenue growth for fixed and mobile networks, Binge On is a concrete step by a mobile operator to operationalize mobile video as a fuller competitor to fixed network linear video.

And T-Mobile US is not alone in believing this is where the market is headed. Broadband services--especially video and Internet access--now drive revenue growth across mobile and fixed networks.

So the key longer term issue posed by Binge On is how successful the offer will be in leveling the playing field with fixed network entertainment video providers. It remains early, and few would yet say Binge On is a head-on challenge to fixed network linear video.

But it clearly is the biggest challenge, yet.