Amazon In Discussions To Provide Affordable Or Free Mobile Service To Prime Subscribers

(RTTNews) - Amazon is contemplating providing affordable or even free nationwide mobile phone service to its Prime subscribers in the United States, a recent report from Bloomberg states.

The tech giant is said to be discussing this potential offering with major telecommunications companies such as Verizon, T-Mobile, Dish Network, and AT&T.

Insiders familiar with the situation revealed that Amazon is contemplating the introduction of wireless plans priced at $10 per month or potentially even free. This strategic move aims to enhance customer loyalty among Prime subscribers. Presently, some individuals may opt to cancel their Prime memberships and then rejoin as needed. However, by integrating mobile service into the Prime bundle, Amazon anticipates that customers would be more inclined to maintain their subscriptions over the long term.

According to the report, discussions regarding the potential offering of mobile phone service to Prime subscribers have been ongoing for approximately two months. However, it is stated that Amazon may take several additional months before launching the service, or they may decide to abandon the plan entirely.

Amazon spokesperson Bradley Mattinger refuted the reports suggesting that the tech giant is considering the addition of mobile service to its Prime offering. Mattinger stated that while Amazon is continuously exploring ways to enhance the benefits for Prime members, they currently do not have any plans to include wireless service.

After the report was published, the stock prices of Verizon, AT&T, and T-Mobile experienced a decline during premarket trading on Friday. Verizon's stock dropped by 5%, while shares of AT&T saw a decrease of 5.9%, and T-Mobile witnessed a decline of 6.8%.

A Prime subscription offers various benefits such as expedited free delivery, access to Prime Video streaming service, and a vast music library with over 100 million songs. Bloomberg's report arrives at a time when analysts have observed a plateau in Prime membership growth, which coincided with Amazon's decision to increase the annual fee from $119 to $139.

Amazon is encountering heightened competition from Walmart and its Walmart+ membership program, which is priced at $98 per year and provides similar fast delivery benefits as Amazon Prime but at a lower cost. Additionally, Walmart+ includes a subscription to Paramount+, which directly competes with Amazon's Prime Video streaming service. In February, Amazon implemented delivery fees for Fresh grocery orders below $150, deviating from their previous policy of providing free grocery deliveries to Prime members for orders exceeding $35.

The report highlights that while Amazon would be compensating wireless carriers for utilizing their networks, these carriers face potential risks if Amazon proceeds with offering low-cost or free mobile service. This is because Amazon would essentially become a competitor, potentially luring away the carriers' existing customers. However, Bloomberg points out that the carriers are unlikely to decline the opportunity due to their substantial investments in 5G networks. They are actively seeking new avenues to generate returns on these substantial investments, making it challenging for them to reject Amazon's proposal.

This potential move by Amazon would not mark the company's initial venture into the wireless industry. Amazon has already announced its intention to test its satellite-internet service, Project Kuiper, in the coming year. Furthermore, in 2014, the tech giant launched the Fire Phone priced at $199. However, the product was eventually discontinued after approximately one year.

It is important to mention that Google already operates a wireless network called Google Fi Wireless. Google Fi functions as a mobile virtual network operator, utilizing T-Mobile's network infrastructure.