Media comment on AT&T/Cricket re-launch

AT&T today re-launched the Cricket brand acquired through Leap Wireless under the AT&T umbrella. The comment below may be attributed to Jan Dawson, Chief Analyst at Jackdaw Research.

The Cricket re-launch marks a new sub-brand for AT&T in prepaid, replacing the Aio Wireless brand it launched about a year ago. This time, it’s combining a familiar prepaid brand with one of the top two wireless networks in the country. This is the first time one of the top two US wireless networks has really put significant heft behind a prepaid brand, and it should be a big boost for Cricket in the market. In addition to the Cricket brand and AT&T network, AT&T is bringing some of the lessons it learned from Aio to the new venture. Aio was given free rein to develop its own processes, retail environments, culture and brand when it was launched by AT&T, operating at arm’s length from the rest of the company. As such, it did a lot of things differently from the parent company and these could easily have been lost as Aio was absorbed into Cricket. However, it looks as though AT&T has kept some of the best parts of Aio rather than simply replacing them, and those will start to filter through in the retail stores, in the branding and in the online and mobile customer experience.

Prepaid is hot in the US wireless market, having long been the red-headed stepchild of the industry. It now represents about a quarter of the subscribers at the big five providers, and is growing fast at Tracfone and T-Mobile in particular. AT&T’s prepaid subscribers haven’t grown in two years, largely because its GoPhone brand isn’t heavily promoted and Aio was still nascent at the time of the acquisition. Cricket represents a chance for AT&T to tap into this market and benefit from some of the growth that’s happening there. The challenge will be marketing the benefits of the AT&T network when AT&T is keen to keep the Cricket brand separate from its own and downplay the connections so as to preserve the perceived value of the AT&T-branded experience. Cricket’s prices are significantly lower than AT&T’s own branded services, and so it will be very careful about articulating the connection between the two, even as it wants to tout the benefits of the much more robust network.

Part of what’s been behind the growth of prepaid in recent years is the increased flexibility it offers versus traditional 2-year contract plans. Whereas it was once the province only of people with sub-prime credit, it’s become more mainstream among people with good credit who want the greater flexibility it offers. But as contracts and device subsidy models on the postpaid side start to change, it’s possible that the attractiveness of prepaid will begin to fade again, and growth will slow as some subscribers migrate back to postpaid plans. AT&T’s bet on Leap is an investment in prepaid’s future, but it remains to be seen whether that’s future is as bright as it has seemed.

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