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Deutsche Telekom (DT) has announced it will launch StreamOn, an initiative for music and video streaming, on April 19, 2017. StreamOn resembles the challenger services offered by DT's subsidiary T-Mobile US. In a move to regain its number one position in Germany – which it lost following the Telefonica–E-Plus merger – DT is offering zero-rated video streaming with partners such as Netflix, YouTube, and Sky Go and audio streaming with partners Apple Music, Napster, and Juke Music. By making StreamOn free, DT has positioned itself as a strong market challenger in Germany, mirroring its status in the US.

DT is following in the footsteps of its US subsidiary with zero-rated streaming

Fighting to regain its number one position in the German mobile market and stop total revenues declining, DT hopes StreamOn will revolutionize the German mobile market while promoting DT's brand and supporting the operator's growth with renewed force. DT is looking to model its growth strategy on its US sister company, which is famous for overcoming digital challenges.

Data was DT's main revenue source, according to its 2016 results. StreamOn is an innovative approach to leveraging consumers' thirst for data and streaming and attract subscribers to DT's MagentaMobil and MagentaEINS product ranges. Competitors will need to play catch-up with this aggressive offer; however, DT must be proactive in pursuing a strategy that allows the initiative to work in the long term.

DT is a mobile-only player in the US, and the political and economic climates in Germany and the US vary dramatically. But DT should learn from its subsidiary in the US because T-Mobile US has been the operating unit that has offset the group's revenue decline quarter on quarter. This decline was caused by the German and European segments.

StreamOn has been partnered with several popular global (and local) video and music OTTs and it offers DT's own video products (e.g. Entertain TV). This makes it similar to the Binge On initiative introduced in the US in November 2015 as part of the Un-carrier approach, where many partnerships were formed and partner products zero-rated. The German operating segment has now followed this lead 16 months later. The offer comes at no extra monthly fee, thus overcoming net neutrality and competition regulations. However, the German regulatory agency will assess the product to ensure competition laws are not violated, requesting adjustments to the plans should it see fit.

When StreamOn goes live, it will be offered as an add-on to all customers on MagentaMobil, MagentaMobil Friends rates, or Family Card rates. It will be available to MagentaMobil M contract customers as a music-only option (StreamOn Music) and available to customers on MagentaMobil L and above as StreamOn Music&Video. Customers of the FMC product, MagentaEINS, will also benefit from HD-quality streaming (under an option labeled StreamOn Music&Video Max). Across all options, data is charged for advertising, covers, games, and other content that is not purely music or video.



Armita Satari, Analyst, Europe

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