Amazon has expanded its Fire brand of devices and software to the service sector with the launch of its Fire TV Hotspot broadband service in India.
The company started offering Fire TV branded broadband connectivity in the Indian city of Mumbai — making it possibly the only one in the world to get Amazon branded broadband services.
Like in case of Fire TV and Fire media streaming devices, the key selling point of the service will be unlimited access to Amazon’s incredible archives of digital content, including songs, videos and movies. Prime shipping is also included for free.
To be sure, the actual connectivity is being provided by a company known as Orange Waves Networks Ltd, which was registered in the middle of last year with its headquarters in Mumbai.
The exact business arrangement between Amazon and Orange Waves Networks is not clear. Orange Waves is not a known internet service provider in India, and may have been set up to cater to Amazon’s Fire broadband service — christened ‘Fire TV Hotspot’.
Given that Amazon’s Fire streaming devices in India do not support wired connections, it is not surprising that the connectivity is being provided wirelessly, via Wifi, and not in the form of a fiber or cable lead.
That said, the bundled broadband connection will not be restricted to Amazon Fire devices, but will be available for use on other devices in the house, such as laptops, and for purposes other than consuming Amazon services, such as work.
PRICING OF AMAZON FIRE TV HOTSPOT
Including the price of prime membership, the total cost of the Fire TV Hotspot service is just Rs 1,499 for three months, or Rs 500 ($6.74) per month. There is also an ‘80% refund’ option for dissatisfied customers.
Given that Prime membership costs around Rs 100 per month, that makes the bundled connection worth around Rs 400 per month. For Rs 400, the customer gets 35 GB of wifi data per day at 30 Mbps, followed by unlimited data at 5 Mbps. In other words, there’s a fair usage cap of 35 GB per day on the Amazon Fire TV Hotspot service, post which the speed is reduced to 5 Mbps for the rest of the day.
Given that 35 GB is enough to stream full HD videos for 24 hours at a stretch, it is unlikely that the FUP cap will bother most users; at least, on most days.
EXPANDING ECOSYSTEM
Fire TV Hotspot, which is essentially a broadband-content combo, is the latest attempt by the former internet-based bookseller to expand the scope of its services.
The company started out as an online seller of books in 1994, before expanding to items like CDs and toys. Later, instead of selling the content on discs, it started streaming it over the internet via services like Prime Video and Prime Music.
Leveraging its extensive and global network of cables and data centers, it also started the business of leasing IT infrastructure (such as servers) to techies and small and large companies alike. Amazon AWS is today the biggest infrastructure-as-a-service provider in the world.
The company’s entry into the world of hardware came in 2007, in the form of a reading device called Kindle.
The Fire brand was launched four years later, when Amazon launched its first tablet, Kindle Fire.
Still later was its entry into the world of TV hardware, in the form of Fire TV — an Android box with a remote controller — and Fire TV stick — both launched in 2014.
In 2015, Amazon made its next big hardware move by launching Echo, a smart speaker with built-in Alexa artificial intelligence and support for controlling and interacting with other household devices.
Back to Fire, in 2016, Amazon started licensing its Fire TV software to third party television manufacturers, who could use the ‘Fire TV’ branding on their television sets in exchange for running their TV on Amazon’s modified Android operating system.
The latest service, Amazon Fire TV Hotspot, has to be seen as the extension of the Fire TV brand beyond hardware and software into services.
CHALLENGES
The company faces many challenges in scaling up its Fire TV branded broadband offering. The first is the ultra competitive nature of the broadband business in India.
India has literally thousands of internet service providers, including pan-India players like Reliance Jio and Bharti Airtel, as well as thousands of small cable operators who provide broadband services to as few as a couple of hundred households by purchasing upstream connectivity from the big boys.
India’s broadband market has resisted consolidation because of the sheer investment required to wire up the country of 1.4 billion people.
It is therefore quite possible that Amazon may resort to rebranding products from third party connectivity providers to expand its Fire TV Hotspot service, instead of trying to get Orange Waves to lay fresh fiber to expand the service.
The second complicating factor is that the market for high-speed connectivity in India is extremely competitive due to the presence of thousands of cable operators who resell upstream connectivity at cut-throat prices. A typical 30 Mbps unlimited connection from a cable operators costs only Rs 350-400 per month, without any daily caps.
India’s biggest wired connectivity provider, Reliance Jio, too offers truly unlimited 30 Mbps connectivity at around Rs 471 per month, although packages that come bundled with content cost more than twice as much.
Finally, the connectivity business in India is a highly regulated one, with an unpredictable regulatory superstructure. Amazon — as a US-based multinational — may find it difficult to hold its own against the lobbying power of the local competitors.