There were some reports in the last few weeks that indicated that when Amazon released their Fire phone, they would embrace AT&T’s Sponsored Data program. The Sponsored Data program lets developers and brands pay to deliver content to consumer smartphones outside of their data caps. Amazon did not include such a plan in their announcement of the Fire phone but have said that they are open to the idea in the future.
“If customers are interested in that. It is something we would look at in the future.” - Amazon CEO Jeff Bezos tells ReCode
As ReCode pointed out last week, Amazon already pays for all data costs for delivering books and magazines to their Kindle tablet. Amazon introduced the cellular-equipped Kindle back in 2007, initially partnering with Sprint and then switching to AT&T.
According to AT&T’s website, the 32 GB verison of Amazon’s new “Fire Phone” costs $200 and the 64 GB version costs $300, both prices requiring a two year contract.
AT&T has tried numerous times over the years to get companies to sign up for their Sponsored Data program yet nobody has signed on for the plan. As GigaOM’s Antonios Drossos notes, AT&T’s Sponsored Data program gives established companies a permanent competitive advantage on the mobile web since up-and-coming startup companies probably won’t have the resources to pay off wireless carriers to make their data unlimited for wireless subscribers.
“Zero-rated mobile traffic is blunt anti-competitive price discrimination designed to favor telcos’ own or their partners’ apps while placing competing apps at a disadvantage. A zero-rated app is an offer consumers can’t refuse. If consumers choose a third-party app like Dropbox or Netflix, they will either need to use it only over Wi-Fi use or pay telcos hundreds of dollars to use data over 4G networks on their smartphones or tablets.” - GigaOM, Antonios Drossos
For the most part, Amazon subsidized the cost of their Kindle Fire tablets therefore many expected Amazon to do the same with the Fire phone by using advertising revenue to cover costs of each phone. Instead, Fire owners will get a free year of Amazon Prime membership.
“Because of the AT&T exclusive and the premium price, Amazon will sell even fewer units than if it had used broader distribution and a more disruptive pricing model.” - Jan Dawson, chief analyst with Jackdaw Research.
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