Topline
Amazon is considering launching an affordable—or possibly free—mobile phone service to Prime subscribers, according to a Bloomberg report Friday, a move that could squeeze the pricing power held by the few giants of the wireless industry.
Amazon is reportedly in talks to potentially add a low-cost wireless service for Prime members.
Key Facts
Amazon has reportedly been in talks with AT&T, T-Mobile, Verizon and Dish to negotiate low wholesale prices that could offer Prime members wireless plans as low as $10 a month, Bloomberg reported, citing anonymous sources close to the matter.
Amazon would act as a reseller or mobile virtual network operator (MVNO), allowing it to set its own prices.
Amazon’s talks have been ongoing for close to two months, and could continue for several more, Bloomberg reported.
While phone service pillars Verizon, T-Mobile and AT&T all saw share prices fall between 5% and 7% premarket Friday morning following the report, Dish—which has a substantially smaller market capitalization than the other three—spiked 9%.
In a statement, Amazon told Forbes it is “always exploring” additional benefits for Prime subscribers, but doesn’t have immediate plans to add wireless at this time.
Forbes reached out to all four wireless companies for comment.
Big Number
168 million. That’s how many Amazon Prime subscribers there were at the end of 2022, according to estimates from market researcher Consumer Intelligence Research Partners. That year-end report marked the first time in its history Amazon Prime did not see annual growth, dipping from 170 million at the end of 2021. “Prime membership continues to grow year-over-year as the value members receive continues to increase,” said Bradley Mattinger, an Amazon spokesperson. Prime members—who have access to extra speedy shipping, as well as streaming movies, TV and music—make roughly two-thirds of all Amazon purchases, CIRP reported. Amazon upped its annual subscription fee from $119 to $139 at the start of 2022.
Key Background
Known as “the big three” of the phone service industry, Verizon, T-Mobile and AT&T all offer unlimited plans starting between $60 to $65 per month, according to their websites. The wireless sector is extremely concentrated, a factor that can contribute to price fixing, according to the Federal Communications Commission. The industry risked shrinking even more when T-Mobile completed its acquisition of Sprint in 2020. But the FCC approved the merger on one condition: Dish had to enter the wireless industry to maintain a fair level of competition in the sector. Dish took Sprint’s place as the fourth largest wireless network provider in the country with close to 8 million subscribers at the start of 2023, and is working to build its own 5G network. Right now, it operates some major MVNOs like Boost Mobile, previously owned by Sprint, which offers a plan starting at $25 a month.
Further Reading
Amazon Is in Talks to Offer Free Mobile Service to US Prime Members (Bloomberg)
Amazon Hiking Prime Membership Cost As Revenue Increases Slightly (Forbes)
Will The Wireless Build Out Help Re-Value Dish Stock Higher? (Forbes)
A brief history of Dish's many attempts to break into wireless (The Verge)
