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URGENT: Video shows beheading of second American journalist

DUBAI (Reuters) - The Islamic State militant group released a video purporting to show the beheading of U.S. hostage Steven Sotloff, the SITE monitoring service reported on Tuesday. A masked figure in the video also issued a threat against a British hostage, a man the group named as David Haines, and warned governments to back off "this evil alliance of America against the Islamic State", the monitoring service said. (Reporting by William Maclean, Editing by Angus MacSwan)

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AT&T launches new brand Aio for prepaid phone service

AT&T mobile phones are seen for sale alongside T-Mobile phones at a RadioShack electronics store in Los Angeles August 31, 2011. REUTERS/Dan
AT&T mobile phones are seen for sale alongside T-Mobile phones at a RadioShack electronics store in Los Angeles August 31, 2011. REUTERS/Dan

NEW YORK (Reuters) - AT&T Inc has set up a subsidiary to offer prepaid wireless services under the Aio Wireless brand, as the No. 2 U.S. mobile service provider looks to compete better with smaller rivals such as T-Mobile US Inc and Sprint Nextel Corp, the company said on Thursday.

AT&T, which in the first quarter lost customers who pay for calls in advance, has until now focused mostly on so-called postpaid customers, who sign contracts and pay monthly bills.

But growth in this segment has slowed, and AT&T must look beyond its traditional customer base for growth. Also, competition has been heating up, with T-Mobile US marketing directly against AT&T and merging last month with prepaid provider MetroPCS.

Aio, which is opening its own stores separate to the AT&T retail locations, is launching in Houston, Orlando and Tampa before expanding into multiple markets over the next year.

The service, which does not require long-term contracts, launched on Thursday in a small number of stores but will expand its presence with new stores in the coming weeks.

Pricing for each Aio plan, which includes unlimited talk, texting and data, depends on how much high-speed data service the customer wants.

For example a package with 100 megabytes of high-speed data will cost $35 while a 7 gigabytes plan costs $70. If the customer goes over their high-speed data limit their speed be reduced unless they pay more for more of the faster service. Aio did not disclose the magnitude of the speed cut.

In comparison AT&T charges $65 a month to its AT&T brand Go Phone prepaid customers for 1 gigabyte of web browsing and unlimited talk minutes and text messaging.

(Reporting By Sinead Carew; Editing by David Gregorio)