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AT&T to Take Aio's Prepaid LTE Nationwide

Sarah Thomas
8/30/2013

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.)

For more

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
Sarah Thomas
9/2/2013 | 5:31:58 PM
Re: Valid lawsuit
Haha. Excellent food analogy, Peter! That is the cycle that operators are hoping for. Given that Aio's pricing is so similar to T-Mobile's, plus both throttle speeds, I wonder what it would take for someone to make the switch, even with the ease of doing so?
Sarah Thomas
Sarah Thomas
9/2/2013 | 5:30:09 PM
Re: Valid lawsuit
I suppose that's logical, kaop, and certainly is T-Mobile's position. It'll be interesting to see how this one plays out, legally.
pzernik
pzernik
9/1/2013 | 7:57:17 PM
Re: Valid lawsuit
Poaching is a good word Sarah....Prepaid customer lack the loyalty component of traditional customers but these eggs are the easiest segment of the population to crack (steal from competitors), certainly tasty for breakfast and bring home the bacon (buy a phone at full cost), might stay for lunch (actually pay their bill), and turn into steak and eggs for dinner (become loyal post-paid customers).
kaop
kaop
9/1/2013 | 7:46:00 PM
Valid lawsuit
T-Mobile has a point because the company's nickname is Magenta.  Also, Aio's prepaid business is same as T-Mobil's no-contract model and aimed directly at the same value conscious consumers.
PaulERainford
PaulERainford
8/30/2013 | 12:00:37 PM
Patently wrong
T-Mob's position reminds me of BSkyB appropriating the word 'sky', so Microsoft had to ditch its Skydrive. I'm claiming the colour 'fucshia' as my own. Though I may have spelt it wrong.
KBode
KBode
8/30/2013 | 11:54:29 AM
Re: Shades of magenta
Yeah the Twitter feud between them has been rather entertaining. 

Including AOI's response, here.

Pricing for AIO doesn't seem particularly revolutionary. It also looks like they're slowing down LTE to around 8 Mbps and banning tethering to ensure they don't cannibalize postpaid customers?
Sarah Thomas
Sarah Thomas
8/30/2013 | 11:25:16 AM
Shades of magenta
It's been funny to see T-Mobile CEO John Legere defend this lawsuit on Twitter. (Btw, follow him @john_legere if you're not already. He's a hoot.) But, I have to say, it seems a little silly. Look at the logos. The colors aren't even all that similar...

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