Amazon is reportedly in talks with major telecom providers in the United States to offer low-cost or potentially free mobile phone service to its Prime subscribers.
According to Bloomberg News, Amazon is discussing with Verizon Communications, T-Mobile US Inc., and Dish Network Corp. to provide wireless plans priced at $10 monthly or lower exclusively to Prime members.
While talks with AT&T Inc. have also taken place, no concrete plans have been announced yet.
Potential New Offering to Boost Amazon Sign-Ups
Reuters notes that these negotiations come as Amazon faces a slowdown in new sign-ups for its Prime service, a key loyalty program offering subscribers expedited shipping and access to video streaming.
Analysts have noted that Prime membership has stagnated in the United States since Amazon raised the annual subscription price from $119 to $139.
With approximately 167 million Prime members as of March, Amazon is facing increased competition from Walmart Inc.'s Walmart+ membership, which offers similar perks at a lower cost.
By partnering with telecom companies, Amazon could introduce an enticing benefit for its Prime members and potentially boost revenue for the participating carriers.
However, the specific details of the potential deals between Amazon and the telecom firms have not been disclosed.
A Closer Look at the News
Asked by Reuters, an Amazon spokesperson stated, "We are always exploring adding even more benefits for Prime members, but don't have plans to add wireless at this time."
For the wireless industry, partnering with Amazon could be an opportunity to generate additional wholesale revenue and attract more customers to their newly expanded 5G networks.
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However, it also poses a potential threat to established carriers if Amazon's Prime wireless service becomes popular and erodes its customer base.
Amazon's Potential Impact on the Telco Industry
Bloomberg notes that Amazon has a history of disrupting industries it enters, and the wireless market is no exception.
The company launched the Fire Phone in 2014 to compete with Apple and Samsung but discontinued it a year later.
Amazon also plans to test a satellite-internet service called Project Kuiper next year.
What's next for Amazon?
By acting as a reseller, or mobile virtual network operator (MVNO), analysts claim that Amazon can avoid the high costs of building its mobile network.
Bloomberg notes that MVNOs have had mixed success, with brands like ESPN Mobile and Virgin Mobile ultimately failing. However, Alphabet Inc.'s Google Fi service operates on T-Mobile's network and has amassed around 2 million customers.
While the talks between Amazon and the telecom giants continue, the impact of such a partnership remains to be seen.
It is clear that Amazon's entry into the wireless market could have far-reaching impacts for both the company and the established carriers.
As the talks go on, the business world will keep a close eye on how this possible partnership develops.
Stay posted here at Tech Times.
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