Amazon is rumoured to be one of the parties interested in purchasing Sprint’s prepaid Boost, and while it might be a long-shot, all rumours eventually seem lead back to Amazon at some point.
According to Reuters, two individuals have suggested Amazon is in the market to purchase the prepaid brand, a casualty of concessions put in front of the telco if it is to realise its merger ambitions with T-Mobile US. While any divestment in Boost is only a potential outcome for the moment, if Sprint and T-Mobile US want to get the merger greenlight from the FCC, ditching one of the prepaid brands would be one of the three conditions.
Of course, what is worth noting is that Amazon is not the only interested party. Boost founder Peter Adderton has also shown interest in buying back the company he sold to Sprint in 2006. Funnily enough, Adderton has been one of the critics of the merger, though his tune seems to have changed since the opportunity to get a deal on Boost emerged…
This is nothing but speculation for the moment. Any divestment in Boost would depend on the merger between Sprint and T-Mobile US being approved, an outcome which is far from guaranteed considering alleged objections from the Department of Justice on the grounds of competition.
That said, a yes is a distinct (but fleeting…) possibility. And Amazon would of course be in the picture.
If Amazon is good at anything, it is a master at selling the brand and draining customer’s wallets for an extra couple of quid each month. Connectivity is an interesting prospect for Amazon, as while some might question why it would want to get involved in such a messy and decreasingly profitable industry, but there is an opportunity to create innovative products through bundling.
According to Ovum’s lead analyst for fixed and mobile Dario Talmesio, this could be an option for disruption. For the core eCommerce business, Amazon offers a premium delivery service for physical goods. For its digital assets, such as the content offering, why couldn’t it do the same? Connectivity is the delivery function of online services, so it is a similar concept.
The big idea here is adding value. Amazon might not necessarily make a significant profit from connectivity, but connectivity as a value add could have a compounding effect on the digital content business.
“Amazon is known for regularly screening the horizon for all kind of opportunities,” said Talmesio. “When it comes to MVNO-like connectivity, Kindle was in industry-first example of providing free (data) delivery, which was included in the cost of the subscription or purchase of the electronic books being downloaded. There is a reason why there should not be looking at replicating the same business to other services.
“Connectivity is a mean to an end: if you want to provide a frictionless retail shopping experience, for instance, why not include connectivity as part of Amazon Prime or Prime video or, in B2B why adding it to AWS services.
“The boundaries between connectivity and cloud are blurring, and the timing could be right for Amazon to redesign the connectivity business the same way they redesigned logistics, retail, and public cloud businesses. Amazon is all about introducing excellence in processes that need to be turned into customer-first and digital first, adding connectivity to their existing plans makes sense, as long as it also makes financial sense.”
A new approach to telecommunications and connectivity is perhaps something which the industry, or more accurately, customers are craving.
Some might consider the telcos are in a slightly precarious position. For years, customers service and experience has been considered an afterthought, and it shows. This has the potential to create a scenario where the retail business of the telcos can be disrupted by those who take a more attentive approach to customer service.
A recent survey from Matrixx suggests 85% of UK and US consumers would consider switching to an Amazon mobile connectivity contract if the option was available. 64% also said they would switch providers to get a similar experience to their favourite apps. The internet giants might not be set up to manage infrastructure, but there may well be interest for alternative brands to manage the customer relationship.
Over in the US, Google Fi is looking like it could be a success as an MVNO, though it is still early days, while in the UK, Giffgaff is gaining traction month on month. Both of these brands demonstrate that an attentive approach to customer service and delivering an innovative service to customers will gain interest from bewildered and frustrated consumers.
Of course, what is worth noting is that this is not the first time Amazon rumours have focused on the connectivity world. Back in 2012, Amazon launched an MVNO service in Japan. In 2014, it launched the Amazon Fire Mobile, though this was pretty much a disaster. In 2015, there were rumours of a US MVNO service. Earlier this year, it was revealed Amazon had partnered with low-orbit nanosatellites firm Kuiper Systems. And of course, customers can buy embedded connectivity with Kindle products.
This is nothing but market speculation for the moment, and while it would surprise a few to see Amazon connected with connectivity, there is a nice fit with other aspects of the business.