Zer01 Wants To Turn Retailers Into Carriers

By Joseph Palenchar -- TWICE, 7/10/2009

Zer01 Las Vegas - Major retailers could be offering unlimited cellular VoIP and data service under their own name if startup Zer01 is successful.

The company turned on its $69.99/month prepaid service this month, when multilevel marketing company Global Verge began selling a phone and service under its Buzzirk Mobile brand on Buzzirk's Web site. GlobalVerge also hopes to sell the service through affinity groups.

Besides targeting affinity groups, CEO Ben Piilani is also targeting big-box retailers, master agents who sell to wireless stores, and master agents who sell to business, all of whom would market the service under their own brand.

The company's MVNE (mobile virtual network enabler) strategy represents a shift from earlier plans to market the service, phones and SIM cards under its own name, enabling Zer01 to leverage the expertise of its future partners, Piilani said.

The company is in discussions with large master agents and big-box retailers, he added.

The $69.99/month plan, which consumers can pay for through credit and prepaid-debit cards, includes unlimited calling throughout the U.S. For another $10/month, consumers can get unlimited international calling to 40 countries. The price includes taxes, and there are no additional fees except for a $30 activation charge. Subscribers can use their phones as wireless modems, Piilani added.

To offer the service, Zer01 has signed interconnect, or roaming, agreements with U.S. GSM carriers to deliver a national data footprint, Piilani said. The service is available initially on any unlocked-GSM Windows Mobile smartphone after an over-the-air software download, but the company plans in the coming months 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 company is also providing its partners with SIM cards and unlocked HTC Titan 2 and Pharos Traveler 137 phones. A SonyEricsson Symbian-based TM506 flip phone will also be available in four to six weeks, Piilani said. Buzzirk is offering the Tital 2 at around $475 and the Traveler at about $550, Piilani said.

Zer01's service bypasses 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 technology services company that also operates land-line VoIP service.

The arrangement reduces voice-call costs by eliminating the use of carriers' circuit-switched voice channels, and it bypasses the monthly data-usage caps that carriers impose on their own subscribers to prevent network congestion, Piilani said. "We're able to do this because we supply the [landline] Internet access," he said.

The downloadable application doesn't quickly drain a phone's battery because it isn't always running in the background, the company said. 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.

Although carriers and MVNOs have recently launched unlimited-use plans down to $45 and $50, Zer01 won't have to adjust its price down in response, Piilani said. The other plans' advertised prices are before taxes and fees, he explained, and those plans either cap data usage or don't allow a phone to be used as a wireless modem.

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