My pal Nancy Gohring wrote a long feature exploring the unlimited cell offering from Zer01: Is investigative technology journalism dead? Not at IDG News Service, at least. Zer01 has been on my radar since last year, when the firm started talking about an unlimited flat-rate cellular voice and data plan. Each time I heard more about the service, the details had changed, and the offer had expanded to sweep in more and more features, like text messaging.
Let's just be straightforward here. Even before Nancy had run down the specifics of Zer01, its CEO, and its affiliates and partners' history, it was clear that there was no way for the firm to be able to do what it claims. Nancy ran down a lot of other warning flags, too. (I don't link to Zer01 because I don't want to add to its link score on Google.)
The company has said all along it was using GSM. Only two operators, T-Mobile and AT&T, have substantial enough U.S. footprints to provide the roaming Zer01 would need. Neither firm could possibly wholesale enough bytes at a low-enough cost to Zer01 to allow unlimited service. Zer01 keeps claiming that it is not a mobile virtual network operator (MVNO), like Virgin Mobile (one of the last standing), but every aspect of how it works requires that it acts as an MVNO.
The firm told Nancy that it had its own fiber-optic network terminated at cell operator equipment so that the cost of transit charged by the carriers would be nil. But it also said outright that carriers' cost for the wireless component of the network was essentially nothing, which is simply ridiculous.
Nancy was able to get AT&T and T-Mobile to state on the record that they have no business relationship with Zer01, which puts the icing on the cake.
There's no such thing as unlimited, except when the cost to a user to obtain unlimited is high enough to restrain use, or the cost to a carrier averages out to low enough that it can make a buck. If you read the fine print on VoIP contracts, almost all have a "fair use" or "reasonable use" number that's high (thousands of minutes), but not infinite.
The bandwidth caps that ISPs are putting on their networks, like Comcast's 250 GB/mo limit, are too low (1 TB would be more reasonable), but it's an attempt to block the 99th percentile users that turn a profitable service into a loss.
Given that the three major 3G carriers have 5 GB/mo caps on usage (T-Mobile doesn't yet have national coverage for 3G), it's impossible to see how their networks could be used by a reseller for unlimited data.
Add to that the promise of unlimited voice minutes and text messages. Even with VoIP, calls to another network require settlement fees, typically per-minute termination fees for landlines, and other rates for cell connections. Text messaging is settled across networks as well using peering contracts or clearinghouse services.
If the major carriers are paying per minute and per message to each other, how can a startup relying on their networks have no cap?