Closeup of hands extending from the side of the photo using a mobile phone, pressing the screen with one index finger, in front of a blurred background of a grassy landscape on a sunny day
Source: iStock | MARINADEMIDIUK

Should Amazon Add Mobile Phone Service as a Prime Perk?

Amazon.com is reportedly talking to wireless carriers about offering low-cost or free nationwide mobile phone service as a perk for Prime subscribers.

The retailing and technology giant is negotiating with Verizon, T-Mobile and Dish Network and has held talks with AT&T about possibly reselling their wireless plans from $0 to $10 a month, according to a report from Bloomberg. The average American pays $144 per month for their phone bill, JD Power told CNBC.

Amazon would become a mobile virtual network operator, which means it could pay to use an existing telecom’s mobile infrastructure network to launch its plans. Google offers such a wireless network through T-Mobile.

“We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time,” Amazon said in a media statement.

“We are not in discussions about inclusion of our wireless in Prime service, and Amazon has told us they have no plans to add wireless service,” T-Mobile said in a statement. Verizon and AT&T issued similar statements.

The Wall Street Journal reported last month that Dish was in talks to sell its nascent phone service through Amazon.

The Bloomberg report indicated talks have been ongoing for around two months. Amazon may take several months to launch the service or scrap the plan entirely.

Amazon’s intent to offer a discounted or free wireless plan arrives as a recent report from Consumer Intelligence Research Partners (CIRP) concluded Prime membership growth has flattened since the subscription’s annual fee in early 2022 was raised from $119 to $139. Amazon disputed the report.

Amazon’s overall growth has also slowed since the pandemic boom it experienced, and Prime faces competition from Walmart+.

An Amazon partnership could help carriers recoup billions spent building 5G networks. Some analysts have expressed doubt carriers would partner with Amazon given that their entry could spark a pricing war in the telecom space.

Amazon would also likely face intense regulatory pressures over customer data linked to cell phone coverage.

Glenn Lurie, Stormbreaker Ventures partner and former CEO and president of AT&T Mobility, believes Amazon would have to heavily subsidize such a discounted plan. “When you start talking about zero or $10, the math doesn’t really work,” he told CNBC.

BrainTrust

"Adding mobile plans would make Prime even more addictive by embedding this service into our everyday habits."

Lisa Goller

B2B Content Strategist


"It’s not like Amazon hasn’t given stuff away before to gain or hold their consumers. I’d probably be in."

Dr. Stephen Needel

Managing Partner, Advanced Simulations


"Could start a pricing war…??? Ya think…??? I know that everyone wants more subscription business, but this sounds crazy…crazy expensive for both Amazon and the carriers."

Jeff Sward

Founding Partner, Merchandising Metrics


Discussion Questions

DISCUSSION QUESTIONS: Do you see more upsides than downsides for Amazon in adding mobile plans to its Prime offering? What would such a plan mean for Amazon’s retail rivals?

Poll

24 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Dr. Stephen Needel
Active Member
9 months ago

It’s not like Amazon hasn’t given stuff away before to gain or hold their consumers. I’d probably be in. Amazon likes to be THE disruptor – their entry would do that quickly and rivals might never catch up on this front.

Richard Hernandez
Active Member
9 months ago

This will be very interesting if this turns in to reality. Other competitors are adding streaming options, etc to boost their value, so why not cell phone service?

Katie Riddle
Member
9 months ago

This isn’t likely to be worth Amazon’s effort in the long run. The mobile market is already crowded, beyond the big 3, and I can’t see how Amazon would offer any additional value except in a race to the bottom in price. Not to mention being outside their core competency.

Gene Detroyer
Noble Member
9 months ago

From a strategic offering point-of- view offering mobile plans for Prime members makes the ultimate sense. Prime is all about being part of members’ everyday life. Anything that can connect a user to Amazon on an everyday basis makes strategic sense.

I can’t judge if the numbers work. The discussion suggests they don’t. However, Walmart seems OK with a $25 /month program. Most importantly, the discussion also reinforces the overall Prime strategy to be a part of everyone’s life.

How far can the Prime connection go? I don’t see many limits.

Rick Watson
9 months ago

It’s hard to imagine this will have much impact on the wireless industry (because Amazon does not own any of the infrastructure).

If Amazon combined a service like this with Kuyper, then there is something to talk about. It all seems a long way off.

Jeff Sward
Noble Member
9 months ago

Could start a pricing war…??? Ya think…??? I know that everyone wants more subscription business, but this sounds crazy…crazy expensive for both Amazon and the carriers. It could be a great value for customers, but I’m not sure it’s a great deal. How much of my data do I want living in the Amazon vaults? It’s one thing for them to know how often I buy dog food, but no thank you on knowing my entire life network.

Bob Amster
Trusted Member
9 months ago

This is a good idea from Amazon. While I don’t think that every current customer of the wireless companies will take advantage of this service – if it happens – it may induce some consumers to enroll in Amazon Prime in order to piggyback this additional perquisite onto other Prime perks. Will this also mean that current Prime members who are also customers of these wireless carriers will be able to switch and immediately reduce their wireless telephone costs? without switching carriers

Lisa Goller
Trusted Member
9 months ago

Adding mobile plans would make Prime even more addictive by embedding this service into our everyday habits. Now that Amazon Anywhere allows seamless in-app and in-game payments, mobile commerce will keep growing.

Amazon would face high costs and regulatory scrutiny if it offers this value-added benefit. Retail rivals will likely consider imitating this move into consumer services.

Cathy Hotka
Trusted Member
9 months ago

Amazon has tried mightily to create an all-inclusive ecosystem to retain members, who seem more than willing to pay for “free” services. Why not add to the offerings?

Ken Lonyai
Member
9 months ago

Amazon doesn’t have enough consumer tracking – it wants to go all in?

For consumers, this will be even more Amazon tracking and profiling.

For telecoms, partnering would likely mean cannibalization of existing more lucrative customers in the hopes that there will be a net gain. Shades of the Toys R Us Amazon partnership debacle.

Scott Norris
Active Member
Reply to  Ken Lonyai
9 months ago

Amazon getting in does not increase the pool of mobile subscribers – we have been essentially at max penetration since well before the pandemic. So it’s just dividing share. Unless one of the Big Three has a LOT of excess network capacity, I don’t see why they would want to play ball.

Michael La Kier
Member
9 months ago

Mobile plans have not substantively changed in decades…remember when we had to pay for texts, data, and per minute for calls? Free mobile service will bring about great change to the mobile phone industry and add great stickiness for Amazon.

Raj B. Shroff
Member
9 months ago

I don’t see how the math works but Amazon as your mobile provider, if you are existing Prime member, is definitely easier. And for Amazon, keeps them top of mind in an important facet of consumers’ lives.

Doug Garnett
Active Member
9 months ago

I never recommend that companies give away things so they can lose more money on an effort. Yet that looks exactly like what this would end up being. If they were to attempt it, we’d be seeing another money losing effort based on mythology that everything becomes profitable at scale. Except, we have lots of evidence they don’t – only a few efforts do.

Jeff Hall
Jeff Hall
Member
9 months ago

It is curious that Bloomberg’s reporting has been directly contradicted by statements from T-Mobile, Verizon and AT&T. Amazon would have to significantly subsidize any such offer of free or very low cost wireless service, in order for the carriers to even consider such an alliance. Let’s just say it actually happens: It would be a huge coup for Amazon for locking in Prime member loyalty and likely exponentially expanding its Prime customer base.

Peter Charness
Trusted Member
9 months ago

Amazon and Walmart are both in the mix for trying to keep customers loyal, so anything that makes a customer stickier is a good idea. At some point there will probably be a consolidation of subscription services providers, I get Netflix through T-Mobile, Disney through Hulu, NY Times, direct, some via Comcast, others directly – it’s a mess, I’d rather deal with just a few major providers for everything. That said cell services are much bigger and more complicated than starting with some of the smaller easier ones. I’d be happy to see a roll up of all the smaller subscriptions before tackling cellular.

Kenneth Leung
Active Member
9 months ago

Would I switch carriers to Amazon Prime benefit plan? I think it depends on the terms of the plan. I imagine there is a “basic” plan that would be all included in Prime benefit and add on as needed for heavy users of data and features like international roam? Would need to see details. There is probably a large enough segment of users that would be happy with the Amazon prime benefits offering that it would entice them to try or switch to Amazon Prime mobile service though…

Mark Price
Member
9 months ago

The biggest benefit to Amazon of adding mobile plans to its Prime offering would be substantial growth of its customer base. High cellular phone costs are a persistent, consumer complaint. The opportunity for Amazon would be to acquire customers who are likely to be very sticky and remain in the Prime program for a substantial period of time. The question really comes down to math — will incremental sales and margin to Amazon from these incremental customers justify the cost of subsidizing the cellular phone plan?

Mark Self
Noble Member
9 months ago

If Amazon adds this service, unless you have a extremely low IQ or an extremely high level of gullibility, you know that, somehow, you are paying for it. Also-perhaps I am in need of caffeine, because I cannot figure out why Verizon, AT&T and others would want to jump on the “race to the bottom” price wagon. On paper? Looks great! But beware the hidden costs-buyer beware!!

Patricia Vekich Waldron
Active Member
9 months ago

Amazon needs to continue to enhance their Prime offering to retain customers. Mobile phone service is ‘Sticky’ which means consumers may be hesitant to switch to – or from – new carrier without a great reason.

Shep Hyken
Active Member
9 months ago

Wow! (FIrst reaction!) It amazes me how Amazon finds more ways to integrate into their Prime members’ lives. This is a wonderful perk that will retain and grow their membership program. But don’t think Walmart, Costco, and other competitors will sit on the sidelines while this happens. I’m sure they are already figuring out how to work this kind of perk or discount for mobile plans into their offerings.

Craig Sundstrom
Craig Sundstrom
Noble Member
9 months ago

it could pay to use an existing telecom’s mobile infrastructure network to launch its plans
Isn’t this just a long way of saying there’s no real point to it ?? And I’ll keep that answer at the ready for a Prime dog-walking service, Prime Air – a new discount carrier – or any other high-publicity , low-logic ideas that get floated.

Brad Halverson
Active Member
9 months ago

Adding mobile to the Prime subscription line-up would be easy for customers to understand and seen as yet another good value, even if only a minority signed up. Amazon is known for taking risks where products or services can be simplified, with an eye on the customer experience.

Rachelle King
Rachelle King
Active Member
9 months ago

If Amazon would like to optimize Prime perks for Prime members they may want to reconsider charging Prime members for grocery delivery. Whether or not a lower cost phone service will offset this rub for Prime members remains to be seen.