Amazon in talks to offer free mobile service to US Prime members

Amazon.com Inc. is in talks with wireless carriers about offering low-cost or possibly free nationwide mobile phone service to Prime customers, according to people familiar with the situation.

The company competes with Verizon Communications Inc., T-Mobile US Inc. to obtain the lowest possible wholesale price. and Dish Network Corp. conversing with. It will offer the wireless plan to Prime members for $10 a month or possibly free and to drive loyalty among its biggest spending customers, said the people, who asked not to be named to discuss a private matter. requested.

One person said talks have been ongoing for six to eight weeks and have included AT&T Inc. at times, but the plan could take several more months to launch and be scrapped.

Shares of Dish rose 14% in New York on Friday as a deal with the retail giant could help the struggling satellite-TV company as it transitions to become a national wireless carrier. Meanwhile, T-Mobile fell 8.4%, AT&T 5% and Verizon 3.5%. The big three national carriers could see their own customers flocking to Amazon for a cheaper alternative. Deutsche Telekom AG, which has a majority stake in T-Mobile, fell 5.7% in Germany.

“We’re always exploring adding even more benefits to Prime members, but we don’t have plans to add wireless at this time,” Amazon spokeswoman Maggie Sivon said in a statement. Verizon and Dish declined to comment.

Amazon’s US Prime subscribers pay $139 a year for privileges such as fast free delivery, video streaming and access to 100 million songs. Analysts say Prime membership has stagnated in the country as Amazon raised the annual price from $119, a sign that a subscription is less attractive to consumers battling high inflation rates. According to Consumer Intelligence Research Partners, about 167 million Amazon shoppers had a Prime membership as of March, unchanged from a year earlier.

Amazon is competing with Walmart Inc., whose $98-per-year Walmart+ membership is emerging as a lower-cost alternative that offers many of the same perks as Prime and free grocery delivery on orders of at least $35. provides. Amazon increased its free grocery delivery limit from $35 to $150 in February.

Amazon effect

For the wireless industry, the Amazon deal could be seen as a welcome boost to wholesale revenue and a way to attract more traffic to newly expanded 5G networks. But Amazon’s entry could be harmful if Prime Wireless becomes popular and starts chipping away at the big carriers’ customer bases.

The market-leading price of one of the world’s largest retailers could easily undercut the pricing power of the big three national carriers, making it attractive for customers to switch to Amazon. Unlimited plans on Verizon and T-Mobile start at $60 per month, AT&T starts at $65.

With Prime Wireless, Amazon will become a new national brand, reselling mobile service from one of the big three carriers. The retailer may choose to offer wireless to its Prime members at an attractive price, prompting customers to cancel their current mobile service. Or, Amazon could go broader and offer Prime Wireless to anyone who wants to switch service and become a Prime member.

Anytime Amazon enters a new market, it sends shivers through the industry as the Seattle-based retail giant has shown readiness to absorb billions of dollars in shipping and film production costs to fuel Prime membership growth. Wireless service may be just another item Amazon is willing to take a hit on if it gives the company a leg up versus Walmart.

no can’t say

The carriers aren’t really in a position to say no to Amazon. After pouring billions of dollars into super-fast, high-capacity 5G wireless networks, mobile operators have little to show for the effort and are eager to find new applications and sales outlets that can generate some return on investment. Are.

Dish will benefit the most from the deal with Amazon. The company is attempting to transform itself into a cloud-based wireless carrier capable of competing with Verizon and AT&T. But it is carrying a load of distressed debt and is looking for new avenues of funding to be able to launch its Boost Infinite wireless service. Dish is already working with Amazon, whose AWS division is providing cloud computing to run the core network for its wireless service and is expected to start selling the Boost Infinite wireless service on Amazon as soon as next month. .

Amazon has already made several moves in the wireless space. In 2014, Amazon acquired Apple Inc. and Samsung Electronics Co. introduced the Fire Phone in an attempt to compete with the devices of the U.S., but was discontinued after a year. The company also plans to start testing a satellite-internet service called Project Kuiper next year.

By taking the approach of a reseller, otherwise known as a mobile virtual network operator, or MVNO, Amazon would avoid the enormous cost of building its own mobile network.

MVNOs have had a colorful track record. Brands including ESPN Mobile and Virgin Mobile both failed. Alphabet Inc. has the Google Fi service that runs on T-Mobile’s network and has approximately 2 million customers.

Wireless is already starting to be bundled as a perk in comprehensive service packages. Cable companies such as Charter Communications Inc., which resells service from Verizon, have said they will soon see a time when wireless service is included in cable bills. Charter and Comcast Corp. have fueled some of the region’s fastest subscriber growth by offering cheap to free wireless service as a promotion bundled with broadband.

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