AT&T is going the 'no contract' route. The wireless provider is now launching a brand-new - and pre-paid - network on Thursday that is set to directly compete with T-Mobile's no contract model. Looks like AT&T is giving T-Mobile a run for its money in the no contract market!

AT&T's no contract model is called Aio Wireless. Pronounced AY-oh, the new service provider runs on AT&T's popular network. It offers prepaid devices that even include Apple's iPhone 5 - which costs $649.99 at full retail price. Apart from the iPhone 5, however, the Aio Wireless network's other prepaid devices are more elementary.

AT&T's no contract Aio Wireless doesn't offer premium devices like the Samsung Galaxy S4 or the Nokia Lumia 920. It does sell the Lumia 620, though - the Windows 8 device will retail for $179.99. AT&T's no contract model Aio Wireless offers three monthly-rate options from $35 to $70. These lean on the 4G data plan, including options for unlimited talk, text, and data. Aio Wireless phones, tablets, and accessories are available online or through distributors.

AT&T no contract service plans include:

  • Aio Basic with unlimited data (throttled after 250MB), talk, and text for $40 per month
  • Aio Smart, which throttles after 2GB for $55 per month
  • Aio Pro, which throttles data after 7GB, for $70 per month

A $15 per month tablet plan offers 250MB of high-speed data. AT&T no contract users can add an additional 1GB of data or add global calling and texting across 35 countries for a one-time or monthly payment of $10.

A spokeswoman for the company talked about the marketing logic behind the differentiated Aio Wireless AT&T no contract plan options and philosophy behind the Aio brand:

"Aio Wireless is targeting consumers who prefer no annual contract and want a first class wireless experience at a value price... [customers] have told us they want simple, easy plan choices with unlimited offers; first-class service at affordable prices; great devices; nationwide voice and data coverage; and no annual contracts. It's not a matter of demographics; it's a matter of targeting a segment of users whose needs are not being met."

Apart from AT&T matching T-Mobile in the respect that they are both no contract models, there are other similarities between the two service providers. Customers are able to pay for a phone up front or in installments. They can even bring AT&T a compatible unlocked phone from another network.

There are differences between AT&T's no contract program and T-Mobile's. Aio Wireless does not require a credit check and prices are flat with no extra taxes, whereas T-Mobile's no contract program offers the opposite. Also, unlike T-Mobile, the AT&T no contract model doesn't support 4G LTE (but it will give phones HSPA+).

"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.

Aio Wireless isn't AT&T's only competitive facet against other mobile providers. They also have a prepaid mobile component through their popular Go Phones, which are simply basic cell phones. The carrier's decision to start up a dedicated no contract branch instead of adding a no contract component to their existing prepaid arm is interesting, and may give the company an edge over similar programs from competitors such as T-Mobile. "We think we'll be able to deliver in a really compelling way through this setup," Van Buskirk said.