AT&T Follows T-Mobile’s Prepaid Lead…Perhaps a Little too Closely

by Matt Klassen on September 2, 2013

In an effort to further infiltrate the growing no-contract segment of the mobile market, AT&T announced last week that its fledgling subsidiary, Aio, will be expanding its prepaid mobile services nationwide this month. But in what is quickly becoming an interesting sidebar, it looks like AT&T’s strategy to enter the prepaid market has been cut and pasted directly from T-Mobile’s playbook, the market incumbent ironically taking cues from the perennial backbencher.

In response to AT&T’s mimicry, T-Mobile has filed a lawsuit against Ma Bell and its Aio (pronounced A-O) subsidiary, arguing that the latter’s use of the colour magenta in its advertising is confusing and infringes on T-Mobile’s trademark brand.

But will this lawsuit have any effect on AT&T’s entrance into the prepaid market, or on T-Mobile’s desperate attempts to maintain its ‘big fish’ dominance in this relatively small pond, or will it simply serve as a sideshow as both companies fight for this growing mobile segment?

In what has become a bemusing about face, knowing AT&T’s general aversion towards the prepaid market—traditionally seen as the lower end budget end of the market spectrum—it’s interesting to see the company now clamouring to establish itself in tha very market space, following T-Mobile’s lead (copying it in fact) in an ironic reversal of fortunes.

AT&T initially rolled out its Aio brand in May in select markets across Florida, Texas, and in Atlanta, but announced in late August that it would be taking its prepaid subsidiary nationwide sometime in September. This announcement comes as AT&T continues to diversify its contract options, its Next plan (also copied from T-Mobile’s no-contract service, Jump!) also offering postpaid subscribers a way to upgrade phones before the contract has expired.

T-Mobile, for its part, had accelerated its own no-contract strategy following its acquisition of MetroPCS, a plan that the Deustche Bank subsidiary can pride itself on given AT&T’s desperation to follow suit. But truthfully, T-Mobile was hoping this day would never come, as the one thing the nation’s fourth place mobile carrier always had was its unique position in the market, a leader in the smaller prepaid market but still big enough to compete with the big boys in the postpaid world as well.

While both Aio and T-Mobile’s respective prepaid plans offer unlimited talk, text, and include data, there are a few differences: Aio charges US$40, $55, or $70 for 4G data caps of 250MB, 2Gm, and 7GB respectively, while T-Mobile charges $50 for the first 500MB of 4G data, $60 for the first 2.5GB accessed, and $70 for unlimited nationwide 4G (something Aio won’t be offering).

Aside from T-Mobile’s unlimited data offering, the truth of the matter is that there is little that separates these two new prepaid competitors, the need to gain a strategic edge evidenced by T-Mobile’s ‘magenta’ lawsuit. While Aio and T-Mobile employ different shades of magenta, its clear T-Mobile resents the entry of another competitor in its prepaid space, particularly a competitor that has the backing of AT&T, and it wants the world to know that AT&T is taking the easy road by copying its advertising.

In a statement T-Mobile said, “When consumers see magenta in the wireless world, they think T-Mobile, but AT&T, through its subsidiary Aio Wireless, has been trying to get a free ride from T-Mobile’s success asAmerica’s un-carrier by using magenta in its marketing. We filed this lawsuit to stop them and to protect T-Mobile’s powerful magenta trademark.”

Again, while nothing will be changed by this lawsuit I’ve come to realize that’s not the point of all this, but instead T-Mobile is simply trying to leave AT&T will egg on its face, showing the nation that Ma Bell has no ability to think for itself, needing to copy one of the country’s mobile lesser lights in order to gain a perch in the prepaid market.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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