AT&T launches prepaid cellphone business

ALPHARETTA, Ga. AT&T (T) is launching a prepaid cellphone service Aio Wireless.

The new subsidiary will offer nationwide wireless service to value-conscious customers interested in unlimited talk, text and data plans without an annual contract.

Aio launches Thursday in select stores in Houston; Orlando, Fla.; and Tampa, Fla. AT&T plans to roll out the service in multiple markets across the U.S. over the next year. The company will offer three rate plans ranging from $35 to $70 a month.

Dallas-based AT&T already offers some prepaid wireless services but this would significantly increase its presence.

Prepaid plans tend to be less profitable for companies. But they appeal to some consumers as they have lower monthly fees, often don't require a credit check or a service contract. However the buyer usually has to pay full or nearly full price for phones

Aio's debut follow's T-Mobile's (TMUS) decision in March to move away from contract-based plans to appeal to more consumers.