Bloomberg reported over the weekend that Amazon “has been talking with wireless carriers about offering low-cost or possibly free nationwide mobile phone service to Prime subscribers, according to people familiar with the situation.
“The company is negotiating with Verizon Communications Inc., T-Mobile US Inc. and Dish Network Corp. to get the lowest possible wholesale prices. That would let it offer Prime members wireless plans for $10 a month or possibly for free and bolster loyalty among its biggest spending customers, the people said, who requested anonymity to discuss a private matter.
“The talks have been going on for six to eight weeks and have also included AT&T Inc. at times, but the plan may take several more months to launch and could be scrapped, one person said.”
The story notes that “Amazon’s US Prime subscribers pay $139 a year for privileges like speedy free delivery, video streaming and access to 100 million songs. Analysts say Prime membership has stagnated in the country since Amazon boosted the annual price from $119, a sign that a subscription is less attractive to consumers struggling with a stubbornly high inflation rate. About 167 million Amazon shoppers had Prime memberships as of March, unchanged from a year earlier, according to Consumer Intelligence Research Partners.”
At the same time, Walmart is looking to disrupt this segment with its Walmart+ business, which costs less ($98 a year) but offers Fewer (for now) benefits.
KC’s View:
Subsequent stories and analysis seemed to reach a consensus – that such a deal by Amazon could be a major disrupter in the mobile category, and that talks between Amazon and telecom companies have not reached the point where any announcement is imminent. Some telecoms denied even talking to Amazon, but who knows how reliable these statements are.
I actually think it could be a brilliant move by Amazon, which generally has done well when focusing on driving up the value of a Prime membership. In fact, I wonder what took them so long to get to this point.
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