Glenn Lurie, the former president and CEO of AT&T Mobility, has weighed in on Amazon’s plans to launch a low-cost or free nationwide mobile service. While Amazon has stated it doesn’t intend to add wireless “at this time,” the company told Forbes it is “always exploring” additional benefits for Prime members. Lurie shared his thoughts on Amazon’s broadband ambitions on CNBC’s “Closing Bell: Overtime” on June 2, 2023. He joined co-anchors Morgan Brennan and Jon Fortt to discuss the improbable math behind an Amazon Prime mobile service. He also discussed the future of the wireless industry.

Amazon In Talks With the U.S.’ Major Mobile Carriers

Anonymous sources recently revealed that Amazon has been in negotiations with the largest mobile carriers in the U.S. for around two months.

By striking a wholesale deal with AT&T, T-Mobile, Verizon, or Dish, Amazon would become a mobile virtual network operator (MVNO). As an MVNO, Amazon would be free to set the cost of its mobile service and offer Prime members mobile plans for a monthly fee of $10 or less.

If true, the move has the potential to diminish the pricing power of the wireless industry’s leaders. Market research estimates that there were 168 million Amazon Prime users in the U.S. at the end of 2022. With more than 310 million smartphone users in the U.S. as of 2023, there’s a large market opportunity for Amazon to offer a competitively priced mobile service.

Glenn Lurie on Amazon Mobile: “The Math Doesn’t Really Work”

The news of Amazon’s possible involvement in the wireless industry has already impacted telecom stocks. AT&T, T-Mobile, and Verizon’s share prices all fell between 5% and 7% premarket after Bloomberg broke the story on June 2.

But speaking on “Closing Bell: Overtime,” Lurie stated that “the math doesn’t really work” for such a low-priced Amazon mobile plan.

Typically, when MVNOs offer low-cost plans, customers don’t get much monthly data in return. But Lurie pointed out that many U.S. postpaid mobile customers use a massive amount of gigabytes each month. Amazon would need a plan for “significant subsidies” to get prices down.

In addition, Amazon would have to align any mobile service plans with the existing frameworks U.S. carriers and wholesalers use.

Lurie acknowledged that the three major U.S. carriers might be open to selling network capacity to Amazon as a way of tapping into new revenue streams. Wholesale was one of the avenues Lurie and his team looked at as a means of revenue growth when he worked at AT&T.

But the wireless expert also noted that carriers should be aware of cannibalization and turning Amazon into a competitor. Aside from driving down mobile plan prices, Amazon’s brand dominance and extensive customer data could encourage loyal Prime users to ditch other carriers in favor of the e-commerce giant.

Project Kuiper: Amazon’s Satellite Broadband Network

Lurie and Brennan also discussed Amazon’s Project Kuiper during the interview. The $10 billion project seeks to increase global broadband access with a constellation of more than 3,000 low Earth orbit (LEO) satellites.

Verizon has already made a deal with Project Kuiper to increase the capacity of the carrier’s cellular network. AT&T and T-Mobile are also developing space-based networks with other satellite providers. While AT&T has partnered with AST SpaceMobile, T-Mobile is working with SpaceX’s Starlink satellite-to-cell service to “end mobile dead zones.”

Network carriers aren’t the only tech companies investing in LEO-enabled services. Apple has announced a major deal with  Globalstar, a global satellite company based in the U.S. The iPhone 14 allows users to connect directly to a satellite to message emergency services.

The Future of Unconscious Connectivity

Lurie explained that while the wireless industry is moving towards space-based coverage, satellites will “play an even bigger role down the road.” He highlighted the growing expectation of the end user that “their device never goes off network.”

Former AT&T and Synchronoss CEO Glenn Lurie Discusses the Future of Mobile

It’s a trend that Lurie has seen in the Internet of Things (IoT) business. Lurie was the president of AT&T Mobility’s Internet of Things Organization (then the Emerging Devices Organization) from 2008-11.

A fully realized IoT would give customers “unconscious connectivity.” As a result, users’ devices would stay connected to a reliable network at all times, no matter where they are on Earth. According to Lurie, carriers who can offer smartphone users the ability to connect to terrestrial and space-based services could increase the value of their services.

While Lurie believes this hyper-connectivity will occur in the IoT space first, the wireless industry might not be far behind. A multi-billion-dollar network like Amazon’s Project Kuiper could provide carriers — and one day perhaps Prime members — with comprehensive service coverage.

Although Lurie doesn’t see any immediate wholesale deal taking place between Amazon and U.S. carriers, he believes partnerships will occur in the future “for sure.”

About Glenn Lurie

Glenn Lurie began his career in the wireless industry at McCaw Cellular. He went on to spend more than two decades at AT&T, serving in several leadership roles and helping the company secure the deal to introduce the first iPhone. As the president and CEO of AT&T Mobility and Consumer Operations, Lurie helped develop three businesses for AT&T:

• The IoT business.
• Digital Life.
• Aio Wireless (now Cricket Wireless).

After retiring from AT&T towards the end of 2018, Lurie joined Synchronoss Technologies as the president, CEO, and a board member. He is currently a venture partner at Stormbreaker Ventures and on multiple boards, including Avis/Budget Group and Pivotal Commware.Follow Glenn Lurie on Linkedin.