AT&T Mobility updated its dated approach to the no-contract market with the rollout of its Aio Wireless service to do battle against growing competition.
The offering, which was hinted at last month by Retail Results, is set to initially launch in Houston, Orlando and Tampa, Fla., with further expansion planned. The service provides for unlimited talk, messaging and data plans across a handful of basic phones, smartphones and a tablet option.
Rate plans start at $40 per month (in the Orlando market), providing “basic” phones with unlimited voice calling, messaging and up to 250 megabytes of “4G” data, before having speeds throttled. Analysts noted that the “4G” aspect of the offering runs across AT&T Mobility’s HSPA+ network, so take the “4G” with a grain of sand.
For smartphones, rate plans begin at $55 per month and ratchet up the un-throttled data amount to 2 gigabytes, or for $70 per month un-throttled data speeds are available for up to 7 GB of usage. For tablets, Aio provides for 250 Mb of un-throttled data speeds at $15 per month, with no allotment for voice or messaging.
Device support is initially pretty deep, with a variety of Samsung, Nokia and ZTE devices, as well as Apple iPhone products. Device subsidies look to be light, especially for the Apple products with a new iPhone 5 selling for $650. The basic phone option includes just a pair, one with a QWERTY keyboard and one without. Customers can also bring their own device to the party, with an Aio SIM card selling for $10.
AT&T Mobility continues to compete in the no-contract space through its GoPhone platform that provide unlimited voice calls, messaging and 1 GB of data for smartphones at $65 per month. That platform also provides various prepaid buckets, daily and per-minute options. AT&T Mobility lost 184,000 direct prepaid customers during the first quarter of this year, which it blamed on slowing GoPhone sales. For all of 2012, AT&T Mobility managed to attract only 128,000 new direct prepaid customers, which was down significantly from the 674,000 direct prepaid customers added in all of 2011.
Analysts did not seem too fazed by the offering, noting that competitors have already reacted to the planned launch and that the market is already highly competitive.
“We believe most knew this offering was coming – including the regional prepay carriers which have prepared for it,” explained Wells Fargo Securities senior analyst Jennifer Fritzsche, in a research note. “While we acknowledge Aio could cause some near term disruption to the likes of [T-Mobile US] and [Leap Wireless], we note that this segment is already one of the most competitive segments in wireless.”
The no-contract space is becoming a growing target for carriers looking to temper slowing sales in the contract space, or at least the continued domination by Verizon Wireless. T-Mobile US recently completed its acquisition of MetroPCS, a stalwart of the no-contract battles, and has also moved aggressively with its device-financing model. Sprint Nextel continues to lean heavily on its various prepaid platforms, while a number of mobile virtual network operators have moved into the space.
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