AT&T is getting serious about prepaid.
The carrier late last week announced Aio Wireless, which features plans ranging from $35 to $70 per month without a contract. The brand will have its own retail outlets, with services kicking off in Houston, Orlando and Tampa, Fla. Look for it to expand to more cities in the coming months.
While the operator says it's not in direct response to T-Mobile's new "uncarrier" strategy, AT&T clearly wants to cash in on the increasingly popular and lucrative prepaid strategy that T-Mo and many smaller carriers have adopted. AT&T already offers the GoPhone prepaid brand, but Aio will go hard and heavy after data users. Those users, however, will have to settle for HSPA+ speeds, as the carrier won't give Aio customers LTE access.
“AT&T’s move here is as smart as it is surprising," noted Yankee Group senior analyst Rich Karpinski, commenting specifically on a Wall Street Journal article. "The operator hasn’t been a major prepaid player, although recent price cuts at its own branded prepaid business show its willingness to go after the long-hanging fruit in the bargain-basement prepaid sector. In this instance, however, it’s best to think about Aio along the same lines as other entrepreneurial-minded business units AT&T has launched in recent years, such as its connected device effort or new Digital Home business, with stand-alone management, metrics and ambitions.
"Today's wireless customers don't want to compromise," said Jennifer Van Buskirk, president of Aio Wireless. "We are set up to win over value-conscious customers who are increasingly moving towards smartphones and mobile broadband."
Aio offers a portfolio of devices that include smartphones, tablets, and feature phones from a variety of manufacturers, including Samsung, Nokia and ZTE.
"[Aio] certainly will draw comparisons to T-Mobile and it’s new uncarrier strategy. And that’s certainly not an unfair comparison," Karpinski added. "But Aio is doing some things differently as well, including emphasizing a mix of subsidized, third-party-financed and unsubsidized (not to mention low and high-end) devices and a strategy to take advantage of AT&T’s ‘good-enough’ HSPA+ network rather than feel the need to do court customers with LTE. Ultimately, Aio’s startup ambitions will be fulfilled – or not – as much by execution as strategy. Independent dealer/owners will have to execute the vision and find the right approach to the in-store customer experience and Aio management must roll with that feedback and continuously tweak to end up at just the right marketing, product, retail and service strategy to get Aio over the startup hump and headed toward real growth. In a crowded mobile services marketplace, that won’t be easy. But this is a smart move — and one surprising in the scale of its ambition and potential reach."
Follow senior online managing editor @Craig_Galbraith on Twitter.