According to a recent report from Bloomberg, Amazon is reportedly considering the launch of a mobile phone service in the United States. The service would target its Prime subscribers and offer them affordable or even free plans, potentially disrupting the dominant players in the wireless industry and putting pressure on their pricing power.
Sources close to the matter revealed that Amazon has been in discussions with major mobile carriers such as AT&T, T-Mobile, Verizon, and Dish. The purpose of these discussions is to negotiate low wholesale prices that would enable Amazon to provide wireless plans to Prime members for as little as $10 per month. As a mobile virtual network operator (MVNO) or reseller, Amazon would have the flexibility to set its own pricing.
The negotiations between Amazon and the carriers have been ongoing for approximately two months and may continue for a while longer, as stated in the Bloomberg report. The news of Amazon’s potential entry into the mobile phone service market had an immediate impact on the share prices of Verizon, T-Mobile, and AT&T, which experienced declines of 5% to 7% in premarket trading. In contrast, Dish, with its smaller market capitalization, saw a 9% increase.
In response to the report, Amazon stated that while it is always exploring additional benefits for Prime subscribers, it currently does not have immediate plans to add wireless services.
With an estimated 168 million subscribers by the end of 2022, Amazon Prime remains a significant force in the e-commerce industry, even though it experienced a slight decline from its 2021 subscriber count of 170 million, according to Consumer Intelligence Research Partners.
If Amazon does enter the mobile phone service market, it could bring disruption by offering affordable options to its large Prime subscriber base and challenging the pricing strategies of established carriers. However, it remains uncertain whether these discussions will result in a concrete offering from Amazon in the near future.
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