By Michelle Castillo

T-Mobile will join the streaming wars in the next few weeks with a free, ad-supported mobile video service, according to a source familiar with the matter.

The company has plans to launch the mobile TV service based on licensed Xumo technology through its Layer3 division, which provides free over-the-top (non-cable or satellite) television and video-on-demand services, the source said.

Some customers will be able to watch live and pre-recorded content via mobile phones and through internet-connected devices, similar to AT&T's Watch TV or Verizon's now-defunct go90. The app for the mobile streaming service will come preinstalled on several T-Mobile devices, including some Samsung phones.

"We're working with Metro by T-Mobile on a snackable content app launching on two phones next month," Xumo wrote in a tweet after the publication of this story.

Allowing for ads will help T-Mobile earn additional revenue as well as subsidize the cost of licensing content. It also acts as a prelude to the separate, still-to-come “disruptive TV service” that CEO John Legere had initially said would launch last year.

“Layer3 enables T-Mobile to enter the home with broadband and payTV which is a dramatically different and more appealing opportunity than simply a phone-based TV service,” said Walter Piecyk, telecoms analyst for BTIG. “The cable industry is ripe for disruption but it’s hard to see how a phone-based TV service would be the most opportune way to do it.”

Xumo and T-Mobile declined to comment. Samsung said it does not comment on rumors and speculation.

Layer3, which T-Mobile acquired in January 2018, is a multichannel video programming distributor (MPVD) that sends its television content to set-top boxes through its own internet protocol instead of via radio frequencies like most cable companies. Layer3 services are available in select markets including Chicago, Washington D.C., and Dallas, among others. Layer3 and Xumo had previously signed a deal in October 2017 to include Xumo’s channels in its service.

While Layer3 does have some existing content deals, T-Mobile delayed its streaming TV product to 2019 in order to get more mobile-distribution rights and add more improvements to set it apart from its competitors, according to Bloomberg.

T-Mobile currently has 77.25 million customers as of its latest earnings report in October 2018, making it the third largest U.S. wireless carrier in the U.S. As it looks to expand its business, it's pursuing several options, including a merger with Sprint and launching streaming TV services. The company already offers unlimited video streaming with Binge On plan, as well as free Netflix subscriptions.

But as more companies enter the streaming space, the barrier for entry to stand out is getting higher. More companies offer cable and satellite alternatives including AT&T’s DirecTV Now, Dish Network’s Sling TV, Google’s YouTube TV, and Hulu with Live TV. Companies like Netflix, Amazon Prime, and Apple are increasing their slates of original shows and movies.

Disney, WarnerMedia, and Comcast are expected to make huge inroads with their streaming services over the next two years. Viacom purchased Xumo competitor Pluto TV in January, which also streams live TV. Theoretically, Viacom will use PlutoTV to add more of its shows onto a streaming service.

Update: This story was updated to include a tweet by Xumo, which clarified it was working with Metro by T-Mobile on the service for some customers.