The service will be the first commercial launch of VoIP over cellular in the U.S., he said. To arrange the service, "we had to get around [wireless] carrier restrictions. If we had to resell their data, we'd be bound by data caps and the fact that they don't allow data for voice over Internet. The way we did that is to interconnect the fiber-optic infrastructure to the GSM network," he said.
"We own the consumer. We do all the customer support, tech support, provisioning of data, the telecom piece, all the content. So essentially to the carrier there's no extra cost," he said.
The carrier would, however, still have to load the customers onto the wireless portion of their network. That piece is typically the bottleneck for operators since they have a finite amount of wireless spectrum over which to carry traffic. "Even 2 to 3 million customers over a geographic area is not going to put that much load on," Piilani argues. He said Zer01 is constantly working with its carrier partners to monitor the usage.
Most operators impose a 5GB data download cap on mobile users, but that's not out of concern for overloading the network, he said. "The reason is, they don't want anybody to know, is they have this huge legacy infrastructure ... this huge legacy telecom thing they have to support," he said.
Gold disagrees with Piilani's reasoning. "If it's because they have old technology to support, they'll still have to support it. He's just going to make it worse," Gold noted.
Also, there are other reasons the operators limit data usage. "The reason they put a cap on things is because they know that if they give you unlimited bandwidth, you will use it. They started out with unlimited and had to back off because their networks were getting swamped. If you start to download a movie a day, their network is going to go down the toilet," Gold said.
It's the wireless component of Zer01's plan that puzzles Gold the most. MVNOs often run their own customer service and back-end systems and lease fiber to carry calls, so they would have a similar setup to the one that Piilani describes. Zer01 would have to arrange some sort of deal with wireless operators for unlimited data usage, and given existing market conditions that seems unlikely. "His model doesn't work," Gold said.
Zer01 says it uses patent-pending technology called Veritable Mobile Convergence, developed by UTG, which "allows each smart phone user to make voice calls or transmit data by sending voice communications through a VoIP system." A patent search did not reveal an application for technology called Veritable Mobile Convergence or patent applications backed by UTG.
VMC is a trademark name that UTG uses to cover the technology, Piilani said. On Friday, he promised to provide information about how to find the patent filing, but three days later the company had yet to produce confirmation that UTG has a patent application pending with the US Patent and Trademark Office.
Some Global Verge sales people, on the many sites they've put up to try to sell the Buzzirk service, say that Zer01 or UTG own 2100 MHz spectrum. Some sites say that UTG bought the spectrum for $50 billion. But Piilani said that's not true. The Buzzirk sales associations are "trying to throw around terminology to make the sales more interesting," he said.
Even a customer service representative on a Buzzirk sales site said via instant message that Zer01 owns the spectrum. "They use GSM phones and 2100 mhz. They have a fiber backbone that the service runs over. They convert the service to a digital signal in the phone and that is one reason it transmits as a digital code through the 2100 mhz and is faster," said Matt Chandler, the service representative.
UTG, Zer01 and Buzzirk do not turn up as winners of the licenses in the 2100 MHz auction, according to U.S. Federal Communications Commission records, although many companies use made-up names for the auctions. However, all the companies that bought vast amounts of the 2100 MHz spectrum are known.
A search on the FCC's licensing system page for Zer01, Unified Technologies and Buzzirk did not show that any of the companies have leased spectrum from another owner.
Global Verge and Buzzirk initially told sales associates that the actual phone service would be available on July 1. Now that the date has passed, they are asking for patience. Saying that it was taking longer than expected, Petschel told listeners on a recent conference call that the top-tier sales associates would start getting phones in the mail in the next week or two.
On Friday, Piilani said that Buzzirk had started turning on service for some agents and that more would be able to start using the service in the next month or so.
Petschel, Lance Dascotte, UTG's chief operating officer, and Ted Robbins, the president of Global Verge, are commonly featured on conference calls for sales associates that can happen as often as twice a week. Some of the associates post the calls online.
While Piilani said there are 50,000 associates,it's hard to confirm exactly how many people have signed up to become Buzzirk sales associates. There are many, many Web sites, some of them nearly identical, set up by sales people.
Rob O'Sullivan is one sales person who claims to have already signed up 250 other sales associates. He's been told not to expect to start getting commission checks for two-and-a-half months after he signed up to the program.
Meanwhile, Zer01's business model seems to change each time it issues a press release. When it launched in March at the CTIA trade show, it said it would directly offer the unlimited service to customers. Its press release called Zer01 a "new mobile national carrier" and said that "Zer01 mobile customers will be able to use their own smartphones or buy a new phone from the online store."
But in May, Zer01 said it would provide its unlimited voice and data service to Buzzirk Mobile subscribers. The service would be marketed by Global Verge, "a mobile virtual network operator for Buzzirk Mobile."
With a July 1 press release, Zer01 changed the content of its Web site and began calling itself a mobile virtual network enabler. Zer01's Web site now positions the company as one that "enables" MVNOs to offer unlimited voice and data services.
"Originally, we were going to go direct to market," Piilani said. "Since the [CTIA] show, we've gotten a lot of interest from distribution players as well as content companies because a lot are interested in unlimited access. So we changed the distribution model after CTIA. Now we're going in a different direction with partners and their brands."
On the Global Verge opportunity line, which anyone can dial into (712-432-1011 Pin: 483294772#), listeners can hear about the service and the sales associate plan. The mobile service is described as "unlimited everything." The handset will be like something out of a science-fiction movie, according to the call. The marketing program will make it easy for anyone to earn about $29,000 a month. "It's truly unbelievable," the voice says. He may be right.
(Nancy Weil in Boston and Stephen Lawson in San Francisco contributed to this report.)
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