According to a report from Bloomberg, Amazon is exploring the possibility of providing low-cost or potentially free nationwide mobile phone service to its Prime subscribers in the United States. The tech giant is reportedly in discussions with major wireless carriers, including Verizon, T-Mobile, Dish Network, and AT&T.
Sources familiar with the matter revealed that Amazon is considering offering wireless plans for as low as $10 per month or even for free. The aim behind this move is to enhance loyalty among Prime subscribers, as some customers currently cancel their subscriptions and then sign up again as per their needs. By bundling mobile service into Prime, Amazon hopes to encourage customers to maintain their subscriptions over the long term.
The talks between Amazon and the wireless carriers have been ongoing for approximately two months, but it may still take several more months for the service to be launched, or the plan may be abandoned altogether.
In response to the report, Amazon spokesperson Bradley Mattinger denied the plans to add mobile service to Prime. However, the news had an immediate impact on the stock prices of Verizon, AT&T, and T-Mobile, with all three experiencing a decline in premarket trading on Friday.
Both Verizon and T-Mobile have explicitly stated that they are not engaged in discussions with Amazon regarding the reported plans. AT&T declined to comment on the matter.
Amazon’s Prime subscription currently offers benefits such as fast and free delivery, access to Prime Video, and a selection of over 100 million songs. The Bloomberg report comes at a time when analysts have noted a stagnation in Prime membership following the increase in the annual subscription fee from $119 to $139.
The potential move by Amazon comes as it faces increasing competition from Walmart’s Walmart+ membership, which offers similar fast delivery perks as Prime at a lower cost. Walmart+ also includes a subscription to Paramount+, a competitor to Prime Video.
While the wireless carriers would be paid by Amazon to utilize their networks, they could potentially lose customers to Amazon if the low-cost or free mobile service is offered. However, the carriers may not be in a position to decline the opportunity, as they have invested significant amounts in 5G networks and are looking for new avenues to generate returns on their investments.
It is important to note that Amazon has already made strides in the wireless industry, with plans to test its satellite-internet service, Project Kuiper, next year. Additionally, the company previously released the Fire Phone in 2014, but discontinued it after about a year. Google also operates a wireless network called Google Fi Wireless, which functions as a mobile virtual network operator using T-Mobile’s network.
