E-commerce giant, Amazon, is reportedly in discussions to provide low-cost or even free mobile phone service to its Prime subscribers in the United States, according to a Bloomberg report. The report suggests that Amazon has been in dialogue with carriers like Verizon, T-Mobile, Dish Network, and AT&T for the last couple of months.
Insiders familiar with the matter revealed to Bloomberg that Amazon may offer wireless plans for as low as $10 per month or potentially for free. The intent behind such a move is believed to strengthen loyalty among Amazon Prime subscribers. Amazon’s current subscription model witnesses instances where some customers cancel their subscriptions only to sign up again as and when required. Offering a mobile service bundled with Prime could potentially ensure long-term commitment from subscribers.
The report points out that the introduction of this service might take several more months, or Amazon might decide to abandon the idea entirely. When reached out for comments, Amazon spokesperson Bradley Mattinger denied the reports, stating, “We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time.”
Despite these claims, Bloomberg’s report led to a drop in the stock prices of Verizon, AT&T, and T-Mobile in the premarket trading on Friday. Verizon and T-Mobile have both officially stated that they are not in any discussions with Amazon regarding this potential venture, while AT&T has refrained from commenting.
The idea of Amazon entering the mobile services arena comes at a time when Prime membership growth has reportedly stagnated. The primary reason for this trend is believed to be Amazon’s increase in the annual fee of the Prime membership from $119 to $139. This move has put Amazon in direct competition with Walmart and its Walmart+ membership, offering similar fast delivery perks at a cheaper price point of $98 annually.
If Amazon does go ahead with this proposed plan, it will pose a direct competition to the existing wireless carriers, which can potentially lose their current customers to Amazon. This is despite the fact that Amazon would have to pay these wireless carriers to use their networks. Yet, Bloomberg notes that these carriers may not be in a position to refuse Amazon’s offer, considering their massive investments in 5G networks and the need for new sales outlets to see some return on these investments.
Amazon’s potential entry into the wireless industry isn’t its first; the company already plans to test its satellite-internet service, Project Kuiper, next year. Additionally, back in 2014, Amazon launched a $199 Fire Phone, though it was discontinued after about a year.
It is noteworthy to mention that Amazon’s tech counterpart, Google, already operates a wireless network called Google Fi Wireless. This service functions as a mobile virtual network operator (MVNO), relying primarily on T-Mobile’s network. Whether Amazon will follow in these footsteps, or chart its own path in this new venture remains to be seen.