According to insiders, Amazon.com is in discussions with wireless carriers such as Verizon Communications, T-Mobile US, and Dish Network to potentially offer low-cost or even free nationwide mobile phone service to its Prime subscribers in the United States.
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The negotiations aim to secure the most favourable wholesale prices from the carriers, enabling Amazon to provide wireless plans to Prime members for as low as $10 per month or possibly at no cost. This initiative seeks to enhance customer loyalty among Amazon’s highest-spending clientele. While these talks have been ongoing for six to eight weeks and have involved AT&T at times, the plan may take several more months to materialize and could be abandoned altogether, according to one source.
Amazon’s US Prime subscribers pay $139 per year for various privileges, including fast and free delivery, video streaming, and access to a vast music library. Analysts have observed that Prime membership growth in the US has stagnated since the annual price increase from $119, suggesting that consumers may be less inclined to subscribe due to persistent high inflation. As of March, approximately 167 million Amazon shoppers were Prime members, the same as the previous year, according to Consumer Intelligence Research Partners.
For the wireless industry, a potential deal with Amazon could be seen as a welcome boost to wholesale revenue and a means to attract more usage on newly expanded 5G networks. However, if Prime wireless gains popularity and starts eroding the customer base of major carriers, it could be detrimental to their business.
Amazon’s ability to offer deeply discounted prices as one of the world’s largest retailers could significantly undermine the pricing power of national carriers, tempting subscribers to switch to Amazon. Currently, unlimited plans start at $60 per month at Verizon and T-Mobile, and $65 per month at AT&T.
With Prime wireless, Amazon would become a new national brand, reselling mobile services from one of the major carriers. The retailer could choose to provide wireless services to Prime members at an appealing price, potentially prompting customers to cancel their existing mobile subscriptions. Alternatively, Amazon could expand its offering and provide Prime wireless to anyone interested in switching services and becoming a Prime member.
The entry of Amazon into any market creates ripples throughout the industry, as the company has demonstrated its willingness to absorb significant costs, such as shipping and movie production, to drive the growth of Prime membership. If Amazon is willing to absorb losses on wireless services, it could gain a competitive advantage over Walmart.
