Offering truly unlimited data and voice cheaper than the major carriers, Zer01 is not just a cheap way to make calls, its a good idea, too.
The appeal of Zer01 is simple. The cellular 'network,' which is in beta testing mode from April through June and will open for business in July, offers unlimited voice and data for $70 per month. There are no contracts to sign, and you bring your own Windows Mobile phone, or buy a specially provisioned WinMo phone from Zer01. When Zer01 means unlimited data, they really mean it, unlike the major carriers who claim unlimited data but cap usage at well under 10GB per month. What's even more interesting than these key selling points is how Zer01 actually works, and how it might change the way networks and customers think about each other.
How does it work?
At CTIA 2009 in Las Vegas, we had a chance to sit down with Ben Piilani, the CEO of Zer01. He explained to us how Zer01 is different from a classic MVNO. With a normal MVNO, say the slowly-dying Helio, the Network Operator buys voice minutes wholesale from a major carrier, in Helio's case Sprint, and then sells them to customers. Zer01 takes a completely different approach. On the carrier side, Zer01 digs deeper into the carrier's data networks, and the actual data is running through Zer01's own fiber network. By setting up interconnect agreements with various GSM carriers (and Zer01 declined to name exactly which carriers they are using), Zer01 is able to provide unlimited data to customers while bypassing carrier's data caps and usage restrictions.
On the customer side, a phone using Zer01's service will have to be reconfigured at the system level. This is why the only phones that will work on Zer01 at launch will be Windows Mobile devices, because Zer01 is still working on getting other smartphone platforms to work properly. Using a phone on Zer01 will not be as simple as inserting a new SIM card, the phone will have to be reconfigured at a dealer shop or using a special software package, which Zer01 hopes to sell at some big-box electronics stores (if there are any left).
The benefit of jumping through all these hoops should be improved data speeds. Since they don't use traditional voice services for calling, Zer01 phones will use a proprietary VoIP app. Users will still dial as normal, and the phone will complete the calls over the data pipe. With the improvements to data latency that Zer01 is claiming it has achieved on the modified smartphones, the company says that VoIP calls will sound good even over GPRS data, the slowest type of cellular data network currently in use. In fact, for simple data transmission, Zer01 is claiming that users will see download speeds in excess of 100Kbps on simple GPRS. On these slower networks, that's pretty impressive.
This is the future for cellular networks
As the nation's two largest carriers, Verizon Wireless and AT&T, move towards LTE as their future network technology, VoIP will quickly become the norm for mobile calling. Unlike today's networks, LTE has no dedicated voice component. Everything that travels over the network is pure data, so phones that use LTE will have to use a VoIP client to make calls. At a special luncheon at CTIA 2009, AT&T CMO David Christopher confirmed that this is the way voice calls will work on LTE networks. He also suggested that in the future, customers may not buy minutes from a cellular carrier, but will instead buy data, and use a VoIP program, like Skype, to make phone calls. For today's technology, this makes sense, and it's one of the reasons we like the idea behind Zer01. On Zer01, you pay for unlimited data, and calls are just a small part of the data you might use.
Phones you've never heard of
One of the coolest benefits of using Zer01 is the ability to buy some of the full-featured, unlocked Windows Mobile phones that the rest of the world has been enjoying for years. HTC, whose carrier phones include the T-Mobile Wing and the HTC Touch Pro, has a slew of phones that most U.S. customers have never seen, and most of their U.S. carrier phones are hobbled in some way. Front-facing cameras for video conferencing are usually removed for the U.S. networks, but on Zer01, users will have access to the full capabilities of these phones. Also, manufacturers who have yet to find an audience on U.S. carriers, like Pharos with their Pharos 137 GPS specialty phone, will find a welcome home on Zer01. Of course, without carrier subsidies, these phones will start at a few hundred dollars and work their way up, but the long term costs of a carrier contract agreement will outweigh the benefit of a $200 subsidy discount for heavy data users.
To compare, an HTC Fuze on AT&T costs $500 without a contract, or $280 with an agreement, discounts and rebates. Unlimited calling and unlimited data will run you $100 and $60 per month, respectively. Within 3 months, a Zer01 plan would save you $270 over a carrier plan, which would more than balance out the extra cost for the handset.
So what's the catch?
There are a few questions remaining. First of all, while there are plenty of cool Windows Mobile phones on the market, we've also heard from Piilani that Zer01 is working on Apple's iPhone OS to get the Apple iPhone 3G to function on the network. If this happens, it will need to happen on a so-called jailbroken iPhone, and Apple has been unequivocal about its denunciation of jailbreak developments. So, before we get excited about a truly unlimited iPhone, we'll wait and see if and how Apple reacts to a carrier officially supporting the jailbreak process.
For that matter, while we have no clue as to the specifics of Zer01's deals with various GSM carriers, we wonder just how far the carriers will let Zer01 go. Piilani led us to believe that heavy data usage will travel over Zer01's fiber, so hopefully there will be no restriction. But once we set up a bittorrent server, or even a Web server, using the fixed IP address that Zer01 provides each handset, will unlimited truly mean unlimited?
Our advice to Zer01
On the demo units that Zer01 showed us, the company had a special menu laying atop the Windows Mobile interface, and the interface design wasn't very good. Our advice to Piilani was not to try to do too much. If the Zer01 service works as well as they promise, that would be good enough for us, and trying to build a new user interface on top of the phones they are supporting would be opening up a can of worms. We like the Zer01 idea because its simple, at least to the end user. Buy any Windows Mobile phone you like, and get the best voice and data package on the market. This will appeal primarily to enthusiasts at first, but these trendsetters will get the word out. We're expecting a modified Windows Mobile phone from Zer01 in the coming weeks, and we'll be sure to keep readers posted on our experience with the nascent network.
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