Thread regarding Verizon Communications Inc. layoffs

I have been part of the talks. What Amazon wants to do isn’t feasible with any carrier unless they want absolute basic functionality with lots of charges for overages. Blue Horizon wants to set up satellites like Space X but their plans are all over the place with unachievable time lines and unrealistic outcomes. Amazon racing Apple to see who can own the “good” of a provider while shedding the bad debt as its own legacy company.

If you know anything Moffet hates verizon. He hated Bell Atlantic Mobile. I wouldn’t listen to anything he says.

What's coming is wireless service that is an add-on to Amazon Prime, Wal-Mart plus and Disney plus. It's going to drive consumer wireless to a pure commodity.

Moffett has been wrong more times than right. Like a teacher, those who do do and those who don't consult and analyze.

Barron's: Amazon Taking on AT&T and Verizon? Why It’s Unlikely.

Dish shares spiked 17% Friday on the news. T-Mobile shares were 8% lower, while AT&T fell 4% and Verizon was off 3%. Amazon added 2%.

Telecom stocks got clobbered on Friday following a Bloomberg story that said Amazon was holding talks with wireless carriers—including the nascent wireless service from Dish Networks—while considering offering service to Amazon Prime subscribers for $10 or potentially free.

That would be exciting to a lot of consumers—and fear-inducing for telecom investors. But there are significant doubts about any such plan.

Amazon (ticker: AMZN), T-Mobile US (TMUS), and Verizon Communications (VZ) all denied on Friday that anything is happening. T-Mobile’s statement on the matter goes so far as to say “Amazon has told us they have no plans to add wireless service.” That echoes Amazon’s own statement which said they “don’t have plans to add wireless at this time.”

Wall Street analysts are skeptical that there is anything actually going on. MoffettNathanson analysts Craig Moffett and Michael Morton wrote in a research note published late Friday that any deal for Amazon to start its own phone service seems highly unlikely. (Moffett covers telecom and Morton covers internet stocks.)

For one thing, Moffett and Morton note that while Amazon could make it happen, the cost to the company of providing even a single line would be about $240 a year—above the annual cost of an Amazon Prime membership, currently at $139. And that’s just for one line—the costs would multiply with bigger families.

Another issue, they add, is that Amazon would suddenly be subject to regulation from the FCC. They point out that customer information is more tightly regulated in telecom than in related industries. That adds more risk to Amazon’s existing regulatory worries. “Even a minimal risk like this would be a deal breaker, in our view,” they write.

From a telecom perspective, the analysts also pour cold water on any potential deal. As for Dish Network, Moffett and Morton write, “there is virtually no chance…that Amazon would allow itself to play guinea pig on a start-up Dish wireless network.” Dish did not respond to a request for comment about the report.

In an interview with Barron’s, Moffett noted that Dish only has partial coverage— the company has launched service in 120 cities so far, but not in places like New York, Chicago, Los Angeles, Washington, or San Francisco. To cover the parts of the country it can’t reach, Dish has reseller agreements with both AT&T and T-Mobile. Moffett says that T-Mobile likely’s agreement with Dish doesn’t allow it to resell access to a third party—like Amazon. And AT&T’s agreement has similar language.

“Without the ability to resell AT&T or T-Mobile service, Dish simply isn’t a credible partner,” Moffett and Morton write. “Not only is their coverage insufficient to be a viable offering, but they’ve never operated a wireless network before, let alone a large-scale MVNO. [An MVNO is a carrier that has no network but instead resells service from other carriers.]”
With T-Mobile and Verizon having denied discussions, and Dish seeming very unlikely, that leaves only AT&T. And Moffett and Morton see little chance of that happening.

“AT&T is smart enough to understand what an awful idea it would be to let Amazon into the hen house, in our view,” they write.

AT&T declined to comment about the report on Friday.

The two analysts also contend that a Prime Wireless plan wouldn’t do much to help Amazon grow its subscription business. They point out that Prime already has signed up about 80% of U.S. households and that churn rates for Prime are already “extremely low.”

Moffett and Morton conclude: “We’re skeptical that the incumbents would be willing to ink a deal with Amazon. We’re skeptical that Amazon would really want to. We’re skeptical that Amazon would be willing to do business with Dish Network. We’re skeptical about…well, all of it.”

Adds Moffett to Barron’s: “Kind of a cockamamie story on every level.”

This is a massive threat to the large carriers. Think about it.
At home, you connect your phone to wifi. Probably at your office, too. So you are only using the cell network while commuting, going out to dinner, whatever. Most of the time you aren't using the network because you are on wifi at home and at work. Which means you are paying way more than you need to for you and your families phone plan.
If Amazon does this, say at $10 per line per month, they will instantly win millions of accounts, and accrue more over time.
The growth story for the big carriers is over, regardless, but it is truly dead and buried if Amazon does this.