Glenn Lurie on Amazon’s Possible Mobile Service: “The Math Has to Work for Everyone in the Ecosystem”

According to a Bloomberg report, Amazon is in talks with major carriers to offer an affordable mobile phone service to U.S. Prime members.

Anonymous sources have revealed that Amazon is in negotiations with T-Mobile, Dish, Verizon, and AT&T to secure the most competitive wholesale prices.

However, former AT&T Mobility and Synchronoss president and CEO Glenn Lurie is unsure that the wireless marketplace’s current economics would allow for such a low-cost plan. Lurie appeared on CNBC’s “Closing Bell: Overtime” to discuss Amazon’s possible mobile service.

Amazon’s History of Industry Disruption

Expanding from books to also offer toys, music, online groceries, and smart home technology, Amazon has a reputation for industry disruption. In the last few years, Jeff Bezos’ tech giant has invested in brick-and-mortar retail and pharmacy services. The company even offers de-risked loans to Amazon merchants.

Now, Amazon could have its sights set on the wireless telecommunications industry. The company has reportedly been in talks with the U.S.’ largest network carriers for almost two months to reach an agreement on low wholesale prices.

These prices would allow Amazon to offer its 168 million Prime members wireless plans for $10 a month or even for free. Bloomberg suggests this could help the company strengthen loyalty among its highest-spending customers.

But wireless telecom industry veteran Lurie says “the math really doesn’t work” for a wholesale model that would price plans at $10 or less.

Lurie spoke to Morgan Brennan and Jon Fortt on “Closing Bell: Overtime” on June 2, 2023. The former AT&T Mobility boss said he had “no doubt” that Amazon is having conversations with wireless carriers. He is also certain that Amazon is “looking for other ways to improve their current performance with their Prime customers.”

But Lurie also emphasized that “the math has to work for everyone in the ecosystem” before Amazon could realize such a low-cost mobile service.

Glenn Lurie on the Economics of Amazon’s Potential Mobile Service

Lurie is no stranger to innovative wireless telecom deals. He led AT&T’s negotiations with Apple to gain exclusivity for the first iPhone release in the early 2000s. But, with 30 years of experience in the industry, Lurie is skeptical of Amazon’s proposed mobile service pricing.

Currently, U.S. postpaid users consume a vast amount of gigabytes each month. Postpaid customers pay the carrier at the end of the month based on their usage, whereas prepaid customers pay for their phone service upfront.

Lurie has stated that even in a “wholesale environment” for large players like AT&T, it could be a “hard task” to make a plan work for $10 or less.

During the “Closing Bell: Overtime” interview, Brennan asked Lurie why the business model that CNBC’s parent company Comcast uses couldn’t also work for Amazon.

Comcast offers Xfinity Mobile through Verizon’s network, and the wireless service is one of many products and services that Comcast offers. But while Comcast offers low-cost wireless services, none are available at Amazon’s suggested figure of $0-10.

Lurie responded that to make the economics of a free-for-end-user mobile service viable, Amazon would have to subsidize the service significantly. He added that Amazon’s plan would have to fit within the current models that carriers and wholesalers are using.

Glenn Lurie Cautions Mobile Carriers to “Be Very, Very Careful”

It’s not only the low price that could stall Amazon’s mobile service ambitions. Unlike many other mobile virtual network operators (MVNOs), Amazon has a wealth of customer data. Lurie says that this competitive edge could give mobile carriers a reason to pause before selling network capacity to Amazon.

On “Closing Bell: Overtime,” Lurie encouraged carriers to consider how Amazon’s customer data could undermine the typical wholesale and MVNO model. 

In this model, wholesale carriers that own and operate a telecom network sell network capacity to other telecom service providers at a set rate. For example, Verizon MVNOs include Xfinity, Spectrum Mobile, and TracFone.

According to Lurie, the carriers’ “number one issue” when working with MVNOs is market cannibalization. With its established brand name, wealth of data, and fierce customer loyalty, Amazon could be well-placed to poach the carriers’ customers.

During his tenure at AT&T, Lurie says the company “looked at every possibility to grow revenue,” including wholesale. Lurie believes that the major U.S. carriers are open to finding new revenue streams.

However, in this situation, Lurie says you need to “be very, very careful” when choosing who to do business — and effectively be in direct competition — with. Will any of the carriers want to find themselves in a position where they’re competing with Amazon?

Speculation Mounts: Amazon’s Potential Entry into Mobile

Following the release of the Bloomberg report on June 2, AT&T, Verizon, and T-Mobile all saw share prices drop between 5-7%. Dish, with a much smaller market capitalization than the others, saw its share prices surge by 9%. 

Amazon has told Forbes that the retail giant is “always exploring” ways to offer more value to Prime subscribers. However, the company also says it has no plans to add wireless “at this time.” That qualifier leaves the door open for an Amazon mobile service in the future.

About Glenn Lurie

For decades, Lurie has played a leading role in the technology, media, and telecom (TMT) space. Named several times in the Global Telecom Business “Power 100,” Lurie is the former president and CEO of AT&T’s Mobility and Consumer Operations. He is also the former president, CEO, and a board member of Synchronoss Technologies.

Lurie’s notable accomplishments in the TMT space include:

• Ushering in the smartphone era by overseeing AT&T’s negotiations with Apple to release the first iPad and iPhone.

• Overseeing the development of AT&T’s industry-leading prepaid flanker brand Aio Wireless (now Cricket Wireless).

• Helping build the Emerging Devices Organization (now the Internet of Things Organization) as a start-up entity within AT&T Mobility.

Today, Lurie is a general partner at Stormbreaker Ventures. He is also a member of several boards of directors, including those at Teal Communications and Pivotal Commware.

Connect with Glenn Lurie on Linkedin.