Amazon talking to carriers about cheap (or free) mobile service for Prime subs – report

Amazon is in talks with multiple mobile network operators about selling a low-cost and potentially free mobile phone service to Prime subscribers, Bloomberg reported (subscription required) Friday, citing people familiar with the discussions.

Bloomberg said Amazon is negotiating potential wholesale deals with Verizon, T-Mobile and Dish Network, which is working with Amazon's AWS unit to help underpin Dish's emerging nationwide 5G network.

Bloomberg said the discussions have been ongoing for six to eight weeks, and talks have included AT&T "at times." Bloomberg also said the discussions may not lead to a deal.

Update: AT&T issued a denial on Friday afternoon. "AT&T is not in discussions with Amazon to resell wireless services," an AT&T spokesperson said via email. Verizon and T-Mobile issued similar denials Friday.

Figure 1: (Source: Piotr Swat/Alamy Stock Photo)

Amazon reportedly wants to put together deals that enable it to sell mobile plans to Prime subs for $10 per month or possibly free to "bolster loyalty among its biggest spending customers." Bloomberg said the idea is also surfacing at a time in which Prime subscriptions have slowed following an annual cost increase from $119 to $139 that took effect in early 2022.

Amazon: no plans 'to add wireless at this time'

However, it's not clear if these discussion will lead to a deal and a service that Amazon can peddle to a massive Prime base that already enjoys other perks, including access to the Prime Video service.

Amazon dumped some cold water on Bloomberg's report. "We are always exploring adding even more benefits for Prime members, but don't have plans to add wireless at this time," an Amazon official told the outlet.

Such statements from Amazon must be taken with a grain of salt. In 2014, the Wall Street Journal reported that Amazon was exploring an ad-supported streaming service. Amazon said then that it's apt to "experimenting with new things, but we have no plans to offer a free streaming media service." Amazon later launched a free, ad-supported streaming service originally under the "IMDb" banner and later rebranded as Freevee.

If Amazon does jump into the MVNO game, it would certainly improve the wholesale businesses of any carriers that decide to work with Amazon. Wholesale is a model that Dish has been eager to pursue for its budding 5G network. News that Dish is one of the parties negotiating with Amazon caused Dish shares to spike $1.30 (+20.78%) to $7.59 each in Friday morning trading.

A move by Amazon into mobile could also steal away retail customers, which seems to be part of why the stocks of US mobile's Big Three dropped Friday: T-MObile shares were down 9.11% in Friday morning trading, AT&T was down 4.97% and Verizon shares dipped -5.11%.

If Amazon does decide to pursue a low-price or free mobile service for Prime members, it could disrupt overall pricing in the mobile market and likewise impact others that use the MVNO model to focus on the lower end of the market. It could also carve into a segment of the market where US cable operators such as Comcast and Charter Communications are having success.

Amazon has tried to make a go of it in the mobile world before, but with disastrous results. Amazon launched its own device, the Fire Phone, back in 2014. But that product, which rode the AT&T network, flopped owing in part to its relatively small app store and its inability to gain traction against the likes of Apple and Samsung.

Related posts:

— Jeff Baumgartner, Senior Editor, Light Reading