Jun 1, 2019 7:00 AM

What Amazon Might Want With Boost Mobile

Sprint and T-Mobile have agreed to spin off Boost Mobile to win approval of their planned merger. A report says ecommerce giant Amazon is interested.

If Sprint and T-Mobile want regulators to approve their $26.5 billion merger, they're going to have to slim down. The carriers have already agreed to spin off Sprint's prepaid wireless service Boost Mobile, Federal Communications Commission chair Ajit Pai said last month. According to Reuters, Boost may already have an unlikely interested buyer: Amazon.

Boost, which became part of Sprint after the carrier's merger with Nextel in 2005, delivers its services over Sprint's network. Any new owner would be able to use the new T-Mobile network for six years, Reuters reports. It's also possible that Amazon, or another company, could acquire rights to some of the wireless spectrum now licensed by the FCC to Sprint or T-Mobile, or even some of the infrastructure owned by those two carriers. The Department of Justice is reportedly less pleased with the idea of a Sprint and T-Mobile tie-up than the FCC is and might want the two companies to spin off other units in order to assure that there are still four major wireless carriers. Amazon declined to comment.

Why might the retail-and-cloud-computing giant be interested in buying a wireless network? In the near term, Boost would give Amazon another service to sell. The company has been expanding its portfolio of Amazon-branded products, from batteries to apparel to kitchenware. Amazon already sells phones and, via third-party sellers, prepaid SIM cards. It's not much of a stretch to think that Amazon could sell phones bundled with an Amazon-branded wireless service. Amazon wouldn't be the first tech giant to operate a mobile carrier. Since 2015, Google has offered its own "Google Fi" mobile service based on T-Mobile and Sprint's service. Amazon once resold internet and phone service from Comcast and the smaller telco Frontier but stopped in 2017.

Longer term, the acquisition could tie into Amazon’s efforts to gain more control over the networks it relies on to reach customers. Everything from its Echo devices to its Prime Video streaming service to its potential delivery drones relies on internet connectivity provided by other companies. Like Facebook, Microsoft, and Google, Amazon has invested in the construction of undersea cables and other fiber-optic infrastructure to ensure it has ample bandwidth to move massive amounts of data around the world. The tech giants have also been working to bring more people online. Microsoft, for example, is developing technologies that allow rural broadband providers to tap unused television spectrum to deliver wireless internet; Google and Facebook have invested in a range of projects, from trenching fiber in Ghana to building drones that could beam internet to remove areas. Amazon is following the lead of Elon Musks's SpaceX and the Richard Branson-backed OneWeb by investing in a low-orbit satellite internet experiment.

Owning its own wireless network, especially if Amazon had its own chunk of spectrum and network infrastructure instead of relying entirely on T-Mobile, would give Amazon another way to reach customers directly. That could be important now that the FCC has gutted its net neutrality rules that banned carriers from prioritizing or discriminating against certain content. That means that carriers could soon charge Amazon to promote its services over its rivals. By owning its own network, Amazon could prioritize its own services over those of its rivals.

If Boost ends up on the market, Amazon wouldn't be the only interested buyer. Boost cofounder Peter Adderton, who oversaw its 2004 sale to Nextel, told CNBC last week that, depending on the terms of the deal, he might be interested in buying the company back.

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