AT&T to Take Aio's Prepaid LTE Nationwide

AT&T is getting serious about prepaid, announcing Friday it will take its new contract-free brand Aio Wireless nationwide starting mid-September.

Aio, which runs over AT&T Inc. (NYSE: T)'s LTE network, could give T-Mobile US Inc. a run for its money as both are targeting value-minded consumers in the US. But, right now, T-Mobile is more worried about Aio's color choice than its strategy. The Magenta operator last week filed suit against AT&T for its use of a similar hue of magenta in Aio marketing, noting that AT&T wants a "free ride from T-Mobile's success as America's Un-carrier by using magenta in its marketing." [Ed. Note: If color were patentable, wouldn't Crayola have done it?]

AT&T first launched the Aio brand in three cities May and has so far expanded to 11 southern cities in the US. The subsidiary offers plans ranging from $40 for 250MB of high-speed data, throttled at the cap, to $70 for 7GB. (See Hello Aio! AT&T Joins Prepaid MVNO Crowd.)

Why this matters
AT&T is going from having only a marginal prepaid strategy with its GoPhone line to a big push for prepaid over LTE with Aio to potentially a huge prepaid presence if its acquisition of Leap Wireless International Inc. (Nasdaq: LEAP) closes. (See AT&T to Acquire Leap Wireless for $1.19B.)

It's clear that prepaid subscribers, while not bringing in as much ARPU as the postpaid crowd, are becoming an important focus for the big wireless operators. That's in part because first-time smartphone buyers are where new growth is at, but also because T-Mobile's "uncarrier" strategy is starting to poach customers on the low end. T-Mobile added 1.1 million customers in the second quarter, its first quarter of customer growth in four years. (See T-Mobile Adds 1.1M Subs.)

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— Sarah Reedy, Senior Editor, Light Reading