The company is able to undercut the competitors by using a voice-over-IP client on the handset for all voice calls. This is made possible by interconnect, or roaming, agreements to use AT&T's and T-Mobile's networks to tunnel to Zer01's IP backbone. For an extra $10 a month, users also will be able to make unlimited international calls to 40 countries.
Zer01 CEO Ben Piilani said the company has developed proprietary algorithms and defragmentation engines to handle latency issues and ensure that the VoIP has a high quality of service, even over an EDGE or GPRS connection. While there are already mobile VoIP applications from Fring and Skype, the difference is that Zer01 is providing the data itself, Piilani said.
"We look at ourselves as a new carrier, and this is definitely a disruptive technology," Piilani told InformationWeek.
The new carrier will initially only be available on Windows Mobile smartphones with version 6 or above, but the company is working to support Android, Symbian, Java Brew, BlackBerry, and "jailbroken" iPhones. Customers will be able to purchase devices directly from Zer01 or bring their existing handsets to the network. Piilani said once Zer01's software integrates directly with the handset's operating system, the end user's experience will be the same as if she were calling on a cellular network.
One of the most appealing factors of the new carrier could be the unlimited data service. The four major carriers have a limit on how much data mobile broadband customers can use, and this can sometimes lead to expensive bills if the cap is exceeded. Piilani said Zer01 will have truly unlimited data, and he wants users to tether their handsets to provide connectivity for laptops on the go.
With the infrastructure already in place, and users prepaying for service, Piilani said the company will be able to generate profits even with a price tag that's about $30 lower than its nearest competitor. One issue the company may face is that it won't be able to offer subsidized handsets, and an unlocked smartphone can cost more than $400. But Piilani said once the service is available on a wide variety of devices, users will be able to use the phones they already own.
While the carriers will generate some revenue from the interconnect agreements, they can't be happy with losing the voice revenue. Piilani said he could not go divulge the terms of the interconnect agreements, but he was not worried about carriers cutting off network access. AT&T didn't respond for comment.
Zer01's service will go into a private beta in April, and the company will announce a commercial launch data at the CTIA trade show next month.
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