US Amazon Prime members may soon be able to get highly discounted or even completely free mobile service, according to a report citing people close to negotiations with carriers.
Amazon is said to have been in discussion with three different mobile carriers for the past six to eight weeks, as part of a plan to revitalize Prime …
Amazon Prime subscriptions stagnated
Analysts cited by Bloomberg say that Amazon Prime subscriptions “stagnated” after the company increased the annual cost from $119 to $139. Growth is reported to have completely stalled, with subscriptions in March of this year said to be exactly the same as the 167M members last year.
The company has been seeking ways to make the deal more appealing, especially since Walmart+ launched at $98 a year.
Free mobile service a possibility
Bloomberg reports on the negotiations.
Amazon has been talking with wireless carriers about offering low-cost or possibly free nationwide mobile phone service to Prime subscribers, according to people familiar with the situation.
The company is negotiating with Verizon, T-Mobile, and Dish to get the lowest possible wholesale prices. That would let it offer Prime members wireless plans for $10 a month or possibly for free and bolster loyalty among its biggest spending customers, the people said, who requested anonymity to discuss a private matter.
AT&T has reportedly also been involved in the discussions “at times,” though the company told us that it “is not in discussions with Amazon to resell wireless services.”
Amazon told us:
“We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time.”
Though that could apply until a deal was signed, so tells us nothing either way.
Carriers could lose out either way
Carriers are likely to be worried by the plans. On the one hand, a bulk-deal like this could see them win millions of new customers; on the other, they may be losing customers paying $50+ per month in favor of those same people paying just $10/month for the same plans.
To anyone wondering how Amazon could pay a carrier $120 a year within a $139 Prime subscription, and then offer free service to members, the report points out that the company isn’t afraid to lose billions of dollars in the short term in order to gain business in the long term.
Anytime Amazon enters a new market, it sends shivers through the industry because the Seattle-based retail giant has shown it’s willing to absorb billions of dollars in shipping and movie production costs to fuel Prime membership growth. Wireless service could be just one more item that Amazon’s willing to take a hit on if it gives the company a leg up versus Walmart.
It remains to be seen whether a deal can be reached, or whether it goes the way of the Amazon Fire Phone.
Photo: Hannah Wei/Unsplash
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