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Thursday saw the launch of a new prepaid wireless carrier as Aio, a subsidiary of AT&T, went live offering Apple's iPhone 5 and service for $55 per month.
Aio (pronounced "A-O") launches initially in select stores in Houston, Tex., Orlando, Fla., and Tampa, Fla., with additional stores opening in those markets in the coming weeks. Over the rest of the year, Aio will roll out service to additional markets in the U.S.
Aio customers will have "unlimited" (throttled after meeting a plan's data cap) service on AT&T's 4G network. Speeds on the network, though, are capped at 4Mbps, despite AT&T's LTE capability.
Customers can choose from a variety of smartphones, tablets, and feature phones from Samsung, Nokia, ZTE, and others. Aio carries Apple's iPhone 5 for $649, while an iPhone 4S costs $499. Customers can also bring their own unlocked, compatible handsets to the service.
Aio service is available in three tiers: Basic, Smart, and Pro. Basic provides 250MB of data per month for $40 per month, Smart 2GB for $55, and Pro 7GB for $70. Customers can also add 250MB for a tablet for $15 per month. An additional 1GB of data can be added to a plan for $10 per month.
Adding a prepay-centric subsidiary may allow AT&T to leverage its larger network and faster data speeds to attract customers from second-tier carriers. AT&T is the second-largest carrier in the United States, trailing only Verizon in terms of customer base. The last quarter, though, saw AT&T lagging Verizon in customer growth as the larger carrier added more than twice the new customers AT&T did.
The Aio subsidiary will also help AT&T address fluctuations in the major carrier segment, giving it a "simple" pricing structure to combat that of recently resurgent T-Mobile, which last month introduced a "no-contract" plan that sees customers paying more up front for smartphones but having their rates lower over time.