Cellular VoIP Carrier Plans Broad Distribution

By Joseph Palenchar -- TWICE, 3/20/2009

Las Vegas — Startup prepaid carrier Zer01 will offer its unlimited mobile VoIP and data service through multiple distribution channels, including online and brick-and-mortar retailers, big-box retailers, master agents and B to B distributors, CEO Ben Piilani told TWICE.

The company plans to announce the commercial launch date of its $69.99/month no-contract service during the CTIA Wireless convention, which runs from April 1-3 in Zer01’s hometown of Las Vegas.

Zer01 will offer retailers an activation commission and residuals for the life of the subscriber, Piilani said of his distribution and marketing plans. Retailers will also be able to make a margin on unlocked-GSM handsets compatible with the service.

The $69.99/month plan includes unlimited calling throughout the U.S. For another $10/month, consumers can get unlimited international calling to 40 countries. There are no additional taxes or fees except for a $30 activation charge.

For the mobile VoIP (MoIP) service, Zer01 has not adopted an MVNO business model, in which a company buys airtime wholesale to resell it under its own name. Instead, Zer01 has signed interconnect, or roaming, agreements with multiple GSM carriers in the U.S. to deliver a national footprint, Piilani said. The service will be available initially on any unlocked-GSM Windows Mobile smartphone after an over-the-air software download. Within six to 12 months, the company plans to offer software for BlackBerry-, Android-, and Symbian-based smartphones as well as on feature phones capable of downloading Java- and BREW-based applications over the air.

The service will bypass carriers’ circuit-switched channels, sending voice as VoIP-based packets over carriers’ packet-based GPRS, EDGE or HSDPA data channels to a virtual private network (VPN) that in turn accesses the public Internet. The VPN is operated by parent Unified Technologies Group, a privately held Delaware company. The arrangement bypasses carriers’ own monthly caps on data usage on their own unlimited-data plans, and it reduces voice-call costs by eliminating the use of carriers’ circuit-switched voice channels. Zer01 also manages the data traffic to reduce the load on a carrier’s network.

Although Zer01’s pricing will undercut the voice/data plans of its carrier partners, Piilani said its partners will benefit from residual payments as well as from their ability to attract subscribers from competing carriers’ networks.

Dealers will be able to buy unlocked handsets through their existing partners or through Zer01, which at launch with six Windows Mobile smartphones, including three HTC-made 3G models. They are the TyTNII, Touch 3G and Touch Diamond, all with 3G HSDPA data service.

Dealers will be able to download the needed application over-the-air and complete the setup in five minutes, Piilani said. The application is a low-battery-drain application that isn’t always running in the background. Instead, the application runs as soon as a call is received or placed. Consumers don’t have to manually launch the application each time they want to make or take a call, he added. All conventional phone functions, including dialing keypad and speakerphone, will work with the application.