By Theunis Bates, Editor at LinkedIn News
Amazon has been negotiating with wireless carriers about launching a $10-a-month or possibly free mobile phone service for Prime subscribers in the U.S., Bloomberg reports, citing anonymous sources. Over the past two months, the company has held talks aimed at securing the lowest possible wholesale prices with Verizon, T-Mobile and Dish Network. AT&T was said to be occasionally involved in discussions. Prime’s subscription growth flatlined in the U.S. after the company last year hiked the annual membership fee from $119 to $139; offering a low-cost or free phone service could win Amazon new Prime subscribers.
- One source told Bloomberg that Amazon’s wireless plan may take months to launch — and could still be canceled.
- An Amazon spokesperson said the company does not “have plans to add wireless at this time.”
- Verizon denied being in negotiations with Amazon in its statement to TechCrunch.
- For more coverage of the tech industry, click here to subscribe to Tech Stack, a newsletter from LinkedIn News.
US telecom companies say not in talks with Amazon for wireless services
reuters.com • 3 min read
https://www.reuters.com/business/media-telecom/us-telecom-stocks-fall-report-amazon-talks-wireless-services-2023-06-02/
Amazon Is in Talks to Offer Free Mobile Service to US Prime Members
www.bloomberg.com • 1 min read:
https://www.bloomberg.com/news/articles/2023-06-02/amazon-talking-with-verizon-dish-t-mobile-to-offer-mobile-with-prime?
Large scale physical asset investment keeps getting harder. Today Amazon announced potential for prime wireless, sending ATT, Verizon and TMobile plummeting, despite the fact that Amazon will just negotiate for the best deal from the infrastructure owners.
As a similar example, pharmacy retailers Walgreens and Rite Aid continue to plummet and CVS is just hanging on due to their foresight buying Aetna. Remember, retail brick and mortar is simply a physically intensive form of distribution infrastructure.
The cliche examples of uber and airbnb, while relevant, aren’t quite as pertinent to my point as the Prime wireless example.
These trends where the software and interface companies take so much value out of an ecosystem disincentivizes physical investment. Why compete to build bigger better infrastructure for the marketplace when a disruptor can swoop in and steal all the cheese either for their shareholders or their customers or both?
No judgment here. Just an observation. One industry that seemed to swing back on this pendulum is airlines. They all but eliminated any way to make money as a plane ticket middleman. So while in the beginning, travel sites made commodities out of airline seats, airlines eventually commoditized the travel sites/bookings.
Until telecom can collectively prevent margin pressure to destroy the core model of large scale multiyear/decade investment rewarded by a long tail of profitable returns, the big telcos(and of course their large scale telecom solution providers) will either be rewarded with pain and suffering as investments dont pay off or they will just reduce their investments in the future. Additionally, effective mobile tower lease negotiation can lead to improved network coverage and connectivity.
And same principle in virtually any industry where a similar dynamic can be impressed upon the economic model driving physical investments.
Last point, with money having gotten way more expensive in the last year or two, the stakes couldn’t be higher.