Amazon Is Said to Have Tested a Wireless Network
Amazon.com Inc. (AMZN) has tested a new wireless network that would allow customers to connect its devices to the Internet, according to people with knowledge of the matter.
The wireless network, which was tested in Cupertino, California, used spectrum controlled by satellite communications company Globalstar Inc. (GSAT), said the people who asked not to be identified because the test was private.
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.
Leslie Letts, a spokeswoman for Amazon, didn’t respond to a request for comment. Katherine LeBlanc, a spokeswoman for Globalstar, declined to comment. Globalstar shares rose 9.6 percent to 66 cents at 2:02 p.m. in New York. The company trades over the counter, which means buying and selling isn’t done through an exchange.
Amazon isn’t the only Internet company that has tested technology allowing it to be a Web gateway. Google Inc. (GOOG) has secured its own communications capabilities by bidding for wireless spectrum and building high-speed, fiber-based broadband networks in 17 cities, including Austin, Texas and Kansas City, Kansas. It also operates a Wi-Fi network in Mountain View, California, and recently agreed to provide wireless connectivity at Starbucks Corp. (SBUX)’s coffee shops.
Amazon continually tries various technologies, and it’s unclear if the wireless network testing is still taking place, said the people. The trial was in the vicinity of Amazon’s Lab126 research facilities in Cupertino, the people said. Lab126 designs and engineers Kindle devices.
“Given that Amazon’s becoming a big player in video, they could look into investing into forms of connectivity,” independent wireless analyst Chetan Sharma said in an interview.
Amazon has moved deeper into wireless services for several years, as it competes with tablet makers like Apple Inc. (AAPL) and with Google, which runs a rival application store. Amazon’s Kindle tablets and e-book readers have built-in wireless connectivity, and the company sells apps for mobile devices. Amazon had also worked on its own smartphone, Bloomberg reported last year.
Chief Executive Officer Jeff Bezos is aiming to make Amazon a one-stop shop for consumers online, a strategy that spurred a 27 percent increase in sales to $61.1 billion last year. It’s an approach investors have bought into, shown in Amazon’s stock price, which has more than doubled in the past three years. The company’s Kindle devices have always been able to connect to the Internet. Some e-readers have a wireless delivery system called Amazon Whispernet, which uses the same nationwide data network as mobile phones, or can access via Wi-Fi.
Globalstar is seeking regulatory approval to convert about 80 percent of its spectrum to terrestrial use. The Milpitas, California-based company applied to the Federal Communications Commission for permission to convert its satellite spectrum to provide Wi-Fi-like services in November 2012.
Globalstar met with FCC Chairwoman Mignon Clyburn in June, and a decision on whether the company can convert the spectrum could come within months. A company technical adviser conducted tests that showed the spectrum may be able to accommodate more traffic and offer faster speeds than traditional public Wi-Fi networks.
“We are now well positioned in the ongoing process with the FCC as we seek terrestrial authority for our spectrum,” Globalstar CEO James Monroe said during the company’s last earnings call.
Neil Grace, a spokesman for the FCC, declined to comment.
If granted FCC approval, Globalstar is considering leasing its spectrum, sharing service revenues with partners, and other business models, one of the people said. With wireless spectrum scarce, Globalstar’s converted spectrum could be of interest to carriers and cable companies, seeking to offload ballooning mobile traffic, as well as to technology companies.
The FCC issued the permit to trial wireless equipment using Globalstar’s spectrum to the satellite service provider’s technical adviser, Jarvinian Wireless Innovation Fund. In a letter to the FCC dated July 1, Jarvinian managing director John Dooley said his company is helping “a major technology company assess the significant performance benefits” of Globalstar’s spectrum.
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