Buzzirk Zer01

A friend of mine contacted me a few weeks ago with information on a “new mobile phone company”, Buzzirk Mobile. The pitch was that they are launching July 1st with UNLIMITED service for a flat $79.95 taxes in. I was skeptical.

He sent me a link to this audio conversation and after listening to it, I have a guess as to what’s going on.

It’s an interview with Ben Piilani of Unified Technologies Group. There were a few things he said that just didn’t make sense – like that their calls were going to sound better because they’re all.digital. Every GSM or CDMA phone (like the one you have now) is all-digital. Not sure what he’s talking about there.

I googled Unified Technologies Group and found their website. I get suspicious when a site has a picture of a big building, but the Contact Us page doesn’t list an address. The domain registration lists an address for utg-inc.net, but I don’t see any office buildings on the map at that location.

Anyway, Zer01 is a “mobile virtual network operator” or MVNO.

What MVNO’s do is buy bandwidth from one of the existing telcos and then resell it. They’re not putting up their own cell towers, and based on the coverage map, it looks like they’re reselling AT&T’s service:

Zer01 coverage:

200907230653

AT&T coverage:

200907230653-1

Look similar?

They’re running a VoIP app similar to Skype on a Windows Mobile phone and leasing the bandwidth from AT&T.

That’s a reasonable business model, except that AT&T isn’t giving them flat rate data. Let’s say AT&T sells them wireless bandwidth at $20 per gigabyte. Zer01 is betting that on average people will use less than 4 gigabytes per month, and that’s where the $80/month price comes from.

Companies have tried this before, and it’s always failed. If you push “unlimited data” then customers will take advantage of it. It doesn’t take many customers downloading 100 gig/month to destroy any profit you made from the users who used less.