When it commenced operations in 1995, Amazon was a humble online book retailer. In the 24 years since then, the firm has become one of the world’s largest e-commerce platforms. Furthermore, the company’s offerings have become incredibly diverse. Currently, consumers can buy things like groceries, original video content, and furniture through its marketplace. Now, the conglomerate might be planning to enter the mobile phone sector.
On May 30, Reuters reported Amazon had expressed interest in buying Sprint’s prepaid subsidiary Boost Mobile. The news service notes the proposed deal would let the retailer use the combined Sprint/T-Mobile network for six years post-merger. Market analysts predict the transaction would be worth $4.5 billion.
The Sprint/T-Mobile Merger
In April 2018, Sprint and T-Mobile announced plans to merge. Though the two telecommunications companies serve over 100 million subscribers, neither has been able to challenge the market dominance of Verizon or AT&T successfully. By joining forces, the two corporations believe they’ll have the subscriber base and resources to expand their market presence significantly. However, because the $26.5 billion merger would consolidate the American mobility market, the U.S. government hasn’t approved the transaction.
So far, Washington has issued two requirements regarding the merger. The Federal Communications Commission has mandated that the two telecoms provide 5G services to rural communities and spin-off Boost into its own company. Additionally, the U.S. Department of Justice (DOJ) told Sprint and T-Mobile they have to create a new wireless carrier to get their merger approved. The DOJ wants four major mobile providers in the U.S. to give consumers competitively priced service options.
Consequently, Amazon’s potential purchase of Boost would help Sprint and T-Mobile complete their objective. But why does the Big Tech firm want to break into mobility?
As Amazon has not publicly confirmed Reuters’ report, the corporation’s reasons for getting into the telecommunications industry are unknown. However, the conglomerate could utilize the prepaid carrier’s subscriber base, infrastructure, and wireless spectrum in a few different ways.
For instance, some of Amazon’s Fire Tablets are 4G LTE-enabled and can download and stream content without a Wi-Fi connection. If the corporation owns its cellular service, it wouldn’t need telecoms like AT&T to provide tablet data service.
Alternatively, Amazon could be looking to improve the capability of its Fire TV service. Currently, the conglomerate’s smart TVs and plug-in peripherals need Wi-Fi to function. However, the next generation of Fire TV products could be 5G enabled, thus providing subscribers with streaming video content without an internet service provider.
If feeling particularly ambitious, Amazon might try and launch a wireless carrier subsidiary. In addition to giving it a new industry to conquer, the firm’s entrance into telecommunications would offer several holistic benefits. As a mobile services provider, the online retail giant would gain access to a wealth of personal user data. With that information, the company could improve its already robust targeted marketing capabilities.
Furthermore, Amazon could offer cellular services as an additional benefit of its Prime membership. Earlier this year, Consumer Intelligence Research Partners reported 101 million Americans are Amazon Prime subscribers. As its current features include expedited delivery, streaming video content access, and unlimited photo storage, phone service could be the cherry on the sundae.
Admittedly, Amazon would have to spend a lot of time and resources to launch and maintain its wireless carrier. But unstoppable growth has always been one of the brand’s core values. Indeed, in its planning stages, founder Jeff Bezos considered calling his e-commerce platform “Relentless.”