After upending the retail world, disrupting cloud computing technology and creating one of the fastest growing loyalty programs in the world, Amazon Prime, Amazon.com is now looking at becoming a reseller of internet connections. The UK does have a law that might help them, but the United States does not. How will Amazon create this new business opportunity for itself?
A report today on Ars Technica shows that Amazon doesn’t want to build its own network. Rather, it wants to purchase wholesale access from other ISP, and then presumably resell internet connections under its own branding.
But there’s a big spanner in the works when it comes to the United States. Overseas, in countries like the UK and Germany, the law requires that broadband service providers make wholesale access available to other companies, even their rivals. For example, British Telecom is required by law to offer wholesale access to their internet services. In Germany, Deutsche Telekom does the same thing. In fact, Ars Technica even suggests that they bundle it with video under the Amazon Prime offering, which makes sense to do.
What an Amazon “Prime Internet” Service Might Look Like
So in these two markets, Amazon may be able to buy ‘while label’ internet access in bulk and then resell it under the Amazon label, but the U.S. is a tougher nut to crack. The main reason for that is that the Federal Communications Commission (FCC), which regulates this industry, did away with network “unbundling” more than ten years ago and has no plans to reinstate those rules, according to the Ars Technica report.
In the United States, Amazon could resort to a workaround and provide internet wirelessly through mobile devices, which is open for wholesale access. However, with broadband providers practically rabid about their utility poles getting into other hands, it’s not likely that an Amazon “Prime Internet” service will be available any time soon in the U.S.
But knowing Amazon, they’re likely going to push ahead aggressively with this initiative in the UK and Germany. By controlling even a small portion of internet connections in key markets like those, they can eventually start offering freebies to attract even more people into the Amazon Prime fold, which is one of their core objectives for their retail business after all.
The biggest point is, Amazon knows how to make a product attractive. They’ve shown it over and over again in multiple areas. It’s not going to be hard for them to create a phenomenal home internet brand that’s dripping with free stuff ranging from streaming media to unlimited cloud storage to preferential treatment on Amazon.co.uk and Amazon.de. Essentially, it’s a brilliant way to get new users to try out Amazon Prime.
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