Amazon in talks to offer low-cost or free mobile service to Prime customers, report saysReading Time: 2 minutes
Amazon is considering offering low-cost or possibly free nationwide mobile phone service to Prime subscribers in the United States, according to a new report from Bloomberg. The tech giant is reportedly in talks with Verizon, T-Mobile, Dish Network and AT&T.
People familiar with the matter told Bloomberg that Amazon is considering offering wireless plans for $10 a month or possibly for free, in a move to bolster loyalty among subscribers. Currently, some people may cancel their Prime subscription and then sign-up again when they want to. If Amazon were to bundle mobile service into Prime, it would likely lead to people sticking with their subscriptions long-term.
The report says the talks have been going on for around two months. Amazon may take several months to launch the service, or may scrap the plan altogether.
Shares of Verizon, AT&T and T-Mobile fell following the publication of Bloomberg’s report in premarket trading on Friday. Verizon stock fell 5%, shares of AT&T fell 5.9% and shares of T-Mobile fell 6.8%.
Verizon and T-Mobile have both stated that they are not in talks with Amazon regarding the reported plans. AT&T declined to comment on the matter.
A Prime subscription includes fast, free delivery, and access to Prime Video and 100 million songs. Bloomberg’s report comes as analysts have said Prime membership has stagnated ever since Amazon raised the subscription’s annual fee from $119 to $139.
Amazon is facing increased competition from Walmart and its Walmart+ membership, which costs $98 annually and offers some of the same fast delivery perks as Prime at a lower cost. The membership also includes a subscription to Paramount+, which competes with Prime Video. In February, Amazon started charging delivery fees for Fresh grocery orders that are under $150. In the past, Amazon offered Prime members free grocery deliveries on orders above $35.
The report notes that although Amazon would be paying wireless carriers to use their networks, the wireless carriers potentially have a lot to lose. If Amazon does end up offering low-cost or free mobile service, it would be competing with the wireless carriers for their current customers. However, Bloomberg notes that the carriers aren’t really in a position to say no, as they have invested billions of dollars into 5G networks and are looking to find new sales outlets to generate some return on their massive investments.
The move wouldn’t demonstrate Amazon’s first foray into the wireless industry, as the company plans to start testing its satellite-internet service, called Project Kuiper, next year. And in 2014, the tech giant released the $199 Fire Phone, but ended up discontinuing it around a year later.
It’s worth noting that Google already has a wireless network called Google Fi Wireless, which operates as a mobile virtual network operator, as it runs on T-Mobile’s network.
Update 06/02/2023 12:30PM ET: Article was updated to include statements from Verizon and T-Mobile.
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