If you purchase an Amazon Kindle e-book reader with a built-in cellular connection, everything pretty much works out of the box right away.
You don’t fork over monthly service fees to AT&T (Amazon’s partner for its Kindle cellular connections), and anywhere you can get an AT&T signal with your Kindle – around the world, even — you can download books (and more) without thinking much about the process.
Amazon clearly has to pay AT&T something for using its cellular service, a cost Amazon hopes to offset by all the books, magazines and newspapers you purchase on your Kindle. But it would ultimately behoove Amazon to cut AT&T out completely and use its own wireless network instead.
There’s a slight problem, though: It’s really, really expensive and time-consuming to build your own wireless network. That’s why recent rumors of Amazon testing out Globalstar’s wireless network – as reported by Bloomberg – are interesting.
Here’s a choice quote from Bloomberg’s piece:
The trial underlines how Amazon, the world’s largest e-commerce company, is moving beyond being a Web destination and hardware maker and digging deeper into the underlying technology for how people connect to the Internet. That would let Amazon create a more comprehensive user experience, encompassing how consumers get online, what device they use to connect to the Web and what they do on the Internet.
Sounds reasonable, right? Amazon sells you stuff that connects to the internet; why not provide the internet connection, too? Bloomberg also digs up earlier rumors of a supposed Amazon-built smartphone, something that hasn’t materialized yet but that would make sense given Amazon’s successful foray into tablets.
However, it’s unclear whether anything will even come of these Globalstar tests. Companies test products and services all the time that never make it to market. It’d be interesting to know whether Amazon’s gunning for a better deal than it gets with AT&T, or if Amazon wants to potentially partner with Globalstar deeply enough that it’s making money (or at least not spending any money on recurring cellular access charges) by doing so.
Bloomberg’s piece smartly points out that Amazon isn’t the only company that might be looking to provide its own internet access: Google’s already doing something similar with its Google Fiber initiative.
Cutting out the cellular middleman – AT&T, Sprint, Verizon, T-Mobile and others – could potentially open up a world of connected gadgets that cost companies like Amazon less to produce, thanks to not having to pay for access charges (savings that would hopefully be at least partially passed along to consumers), and could make it to market more quickly by not having to pass through a gauntlet of compatibility tests on the various providers’ networks.
We’ve got a lot of hypotheticals at play here, but imagine if Amazon started selling a smartphone with its own built-in voice and data plan – no monthly charges, no dealing with a cell company, no two-year contracts. Maybe Amazon gives you a modest starter plan for free and then upsells you on more voice minutes and data access. As long as this Amazon phone worked decently, it’d sell like hotcakes – even at far more than $200.
When Amazon rolled out its AT&T-enabled Kindle Fire HD tablet, it offered a year of modest data access for an unthinkable one-time fee of $50, with optional upgrades available through AT&T. Why not own the cellular pipe itself, offer a modest plan for free with the purchase of Amazon hardware, and pocket all the optional service upgrades itself?
Amazon Is Said to Have Tested a Wireless Network [Bloomberg]