T-Mobile threw down the low-price gauntlet, and AT&T isn't hesitating to pick it up and run with it. AT&T has launched Aio Wireless, a value-oriented brand, to compete with the fourth-largest carrier on its low-cost turf.
AT&T is billing Aio Wireless as a nationwide wireless service for consumers looking for a first-class wireless experience at a value price. Like T-Mobile, Aio offers unlimited talk, text and data with no annual contract. But T-Mobile doesn't have anything to worry about in most of its markets in the near term.
That's because Aio will roll out slowly over the year. The first markets to get the new service are Houston, Orlando and Tampa. Three new markets will come online in the coming weeks, according to the company.
Understanding the Plans
"We talked with no-annual-contract customers and created our service around what they want," said Jennifer Van Buskirk, president of Aio Wireless. In her research, she said, no-annual-contract customers want simple, easy plan choices with unlimited offers; first-class service at affordable prices; great devices; nationwide voice and data coverage; and no annual contracts.
"We are set up to win over value-conscious customers who are increasingly moving towards smartphones and broadband," she said.
Aio has three rate plans to choose from for smartphones, tablets and feature phones. The company will offer devices from several manufacturers, including Samsung, Nokia, and ZTE. There was no mention of the iPhone.
Aio's unlimited talk, text, and data rate plans range from $35 to $70 per month and promise 4G download speeds of up to 4 megabits per second. Aio will allow customers to bring a compatible, unlocked device for activation on the network.
Cracking Open an Opportunity
Some may view the launch of Aio as ironic, considering AT&T's failed bid for T-Mobile. Will it work? Wireless industry analyst Jeff Kagan said Aio is not a transformation of the wireless space -- it is a new slice to the wireless pie giving customers more choice.
"The wireless world suddenly has another competitor. If handled correctly, Aio Wireless could grow into a well-known brand name in the prepaid market," Kagan said. "Aio Wireless has the know-how of AT&T behind them. Aio Wireless is a prepaid service designed to serve this young and rapidly growing market segment."
While prepaid is a rapidly growing market segment, Kagan said post-paid brand names have not cracked open this new opportunity. AT&T is trying with Aio, and may be just what customers want.
"Many prepaid customers today buy from lesser-known brand names," he said. "There is an opportunity here if Aio Wireless can hit the target.
"Will Aio Wireless crack open this new opportunity? We'll have to wait and see, but that is obviously their plan. These are many of the same people that created the Cingular success story. Cingular rapidly grew into the most successful brand name in wireless. Can they make lightning strike twice?"