AT&T & LG Electronics have announced a new phone, the trax, that gives users access to subscription music services such as Napster and eMusic. The phone offers an alternative to the computer-centric approach championed by Apple with its iPhone/iTunes offering.

The trax is a multipurpose clamshell-shaped phone that connects to AT&T’s 3G UMTS/HSDPA network. Besides video sharing, AT&T offers video streams, music downloading, and other services on the high-speed network. The phone also supports Bluetooth wireless technology used in hands-free headsets, and includes a 1.3-megapixel camera and in-camera photo-editing.

And at $130, it offers a cheap alternative to the relatively expensive iPhone, which has sophisticated support for Internet media, but is designed to be a computer peripheral. By offering both the iPhone and phones like the trax, AT&T appears to be betting on the iPhone, but hedging its bet by offering ever-more-powerful inexpensive phones.

trax is MobiTV and XM Radio Mobile-capable so users can access streaming live TV and digital radio. MobiTV provides television and music content for mobile devices and broadband. The trax also can be used to access AT&T’s Cellular Video (CV) service, which features content from CNN, the Weather Channel, Comedy Central and HBO.

“The trax by LG offers AT&T customers an extremely functional music phone with a cutting-edge design,” says Ehtisham Rabbani, vice president of product strategy and marketing for LG Electronics. “Features such as CV and the ability to sync music from Napster, eMusic and Yahoo! Music make trax an excellent phone for the convergence of communication and entertainment.”

The phone will support AT&T’s Video Share service that lets users share live video over their wireless phone on a voice call. It also features a 1.3 megapixel camera with in-camera photo editing capabilities.

The new phone will be available in AT&T retail stores beginning Aug. 14.