Questions for Zer01

CNET readers have raised concern over VoIP carrier Zer01. Here's what we know so far.

Kent German Former senior managing editor / features
Kent was a senior managing editor at CNET News. A veteran of CNET since 2003, he reviewed the first iPhone and worked in both the London and San Francisco offices. When not working, he's planning his next vacation, walking his dog or watching planes land at the airport (yes, really).
Kent German
4 min read

For the past few weeks we've received several e-mails inquiring about Zer01, a new company that it touting a VoIP cell phone service. From what we can tell, CNET readers are intrigued at the prospect, but they're also skeptical about what Zer01 is promising. Though CNET has written about the company only marginally, we've been more than skeptical too.

After debuting in April at the CTIA show, Zer01 quickly garnered analyst praise and several awards. But in the last two months, the company has been dogged by negative press questioning its business relationships and practices, the feasibility of its technology and the veracity of its claims. Citing "ethical questions" Laptop Magazine even rescinded its award from CTIA on August 4.

Indeed, valid questions about Zer01 have been raised. We won't repeat them all here--a simple News search will reveal many results--but we can offer a Q&A covering current developments.

Q: What is Zer01 promising?

A: Zer01 promises unlimited voice and data cell phone service for $80 per month. No contracts are required and its handset lineup should include a selection of GSM smartphones. At CTIA, Zer01 announced a July 1 launch date, but it has yet to introduce service to consumers. On July 1, Zer01 only announced that it was looking for distributors.

Q: How does the service work?

A: Zer01 says that it will deliver VoIP-based services over a standard cellular network. Beyond the basics, however, the company has yet to publicly reveal the full technology behind its promised service. What's more, in other media reports some analysts have questioned whether truly unlimited data is feasibly or economically possible.

Zer01 spokesman Ron Dresner says the company has secured agreements with major carriers to deliver its service. Due to confidentiality agreements, however, he would not reveal which carriers are involved. As Zer01's promised phones are GSM, the obvious choices are T-Mobile and AT&T, but the carriers have not confirmed any involvement.

Q: What happened with Buzzirk Mobile?

A: Last Thursday, Zer01 announced that it was severing its relationship with Buzzirk Mobile, its sole distributor. In a press release, Zer01 cited breach of contract, but Dresner declined to discuss specifics.

Q: Was there really trouble with Buzzirk Mobile?

A: Yes, to put it mildly. Buzzirk was using a related multilevel marketing firm called Global Verge to sell Zer01's service. While that in itself caused some controversy--multilevel marketing isn't an industry with a stellar reputation--Mark Petschel, Global Verge's former CEO and now chairman, wasn't making things better. Petschel is currently on probation after pleading guilty to securities fraud in 2005.

Dresner says that Zer01 wasn't aware of Petschel's background prior to partnering with Buzzirk. He also wouldn't comment on reports that Global Verge/Buzzirk was using misleading statements when representing Zer01 or allegations that the companies had run a pyramid scheme to recruit sales associates. The only phone number listed on Buzzirk's Web site leads to a full voicemail box, but in a reply to an e-mail inquiry, spokesman Ted Robbins said that Buzzirk would make a statement later this week.

Q: So will Zer01 service really launch?

A: In short, we'll believe it when we see it. Though Zer01 could pull it off , and we want to give it the benefit of the doubt, the continued delay in availability, its relationship with Buzzirk/Global Verge and the absence of official information fuels our skepticism even further. We're not ready to say it's vaporware just yet, but we're close.

For his part, Dresner assured us that Zer01 is on track. He also brushed aside any skepticism by saying that the products and service "will speak for themselves." In the coming weeks and months Dresner says that Zer01 will be making more announcements regarding distributors, content partnerships (Netflix is rumored) and phone availability. As for the technology, we've confirmed that Zer01 has a filed a provisional application for a patent, but that's hardly a guarantee that the service will work.

Dresner promised to send test units of Zer01 handsets to CNET and other media outlets in the next few weeks. When, and if, that day arrives will be able to make a better judgment on how feasible Zer01's service is. Dresner denies Latop reports that Zer01 missed a previously set July deadline for review units.

Q: What should consumers do?

This remains a sticking point, in our option. As Zer01 will offer its service and phones only through distributors, consumers won't be able to purchase them directly from Zer01. Though Dresner hinted that distributors would include "big box retailers," we'd prefer to not deal with a middleman. But if you're still interested, Dresner says to watch Zer01's Web site for coming availability announcements.

Do you have anything to say about Zer01? Let us know below.