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AT&T's Aio Wireless rounds on T-Mobile's no-contract plans

A brand-new no-contract player backed by AT&T enters the cell phone rate plan ring, but without LTE.

Aio Wireless

Well, this is interesting. AT&T launched a brand-new prepaid network on Thursday that goes head-to-head with T-Mobile's new no-contract model.

Called Aio Wireless (pronounced AY-oh), the new wireless service provider leans on AT&T's network and offers a range of prepaid devices, including Apple's iPhone 5, which costs 649.99 full retail.

Other smartphones are decidedly more entry-level, and Aio does not offer premium devices like the Samsung Galaxy S4 or Nokia Lumia 920. It does, however, sell Nokia's budget Lumia 620 Windows phone 8 device for $179.99.

There are striking similarities between Aio's new service and T-Mobile's, including the no-contract angle, of course, and being able to pay for a phone up front, in installments (Aio uses a third-party leasing company,) or simply bringing a compatible unlocked phone from another network.

Unlike T-Mobile's service, Aio Wireless doesn't require a credit check, and prices are all-inclusive, without any additional taxes on top. Importantly, Aio does not support 4G LTE, though it will give phones 4G zing in the form of HSPA+.

Aio Wireless retail store
AT&T's home-grown Aio Wireless stores open up in three cities. Aio Wireless

The three monthly rate options range from $35 to $70 and are contingent on the 4G data plan, including an option for unlimited talk, text, and data.

Aio Wireless launches first in Houston; Tampa, Fla.; and Orlando, Fla., and Aio phones, tablets, and accessories are available online or through distributors, though you won't find Aio-branded products in AT&T stores.

"We see [that] consumers in this value-conscious, no-contract space have traditionally had to compromise" on price, handsets, and service, Kathy Van Buskirk, head of public relations with Aio Wireless, told CNET.

Although AT&T started Aio from scratch to serve the prepaid market segment, customers may not receive the exact same service. The network taps into AT&T's radio access network (their cell towers and switches,) but Aio manages its own core network for voice, data, and messaging, Van Buskirk said.

AT&T already has a prepaid mobile arm through its Go Phones, which are typically basic cell phones, so it's interesting to see the carrier pass up the opportunity to attack T-Mobile head-on with an AT&T-branded no-contract arm and instead act behind a new, unknown brand.

According to Aio's Van Buskirk, that's all part of the plan. "We think we'll be able to deliver in a really compelling way through this setup," she said.

Article updated at 9:49am PT with more details about Aio's network management and at 10:02am with details on 4G support.