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Truth starting to come out about Zer01

Leading up to July 1, there was no shortage of hype surrounding Zer01, the company which promised unlimited voice, messaging, and data for $70 per month. In the days leading up to their launch, they sent out some questionable marketing materials, claiming speeds equivalent to 5G. Yes, as in an entire generation faster than 4G, which won’t be deployed until later this year. I expressed my doubts, and many commenters chimed in as well. Now that the service has been “live” for a few weeks, we’re starting to learn a bit more — and it’s not good. Nancy Gohring of IDG News Service (via PC World) takes a deeper look at the operation.

Gohring uncovers a lot of dirt, and many inconsistencies, with Zer01’s parent company, Unified Technologies Group. This includes multiple corporate registrations, failure to file reports, and shady partnerships (more on that in a minute). It’s a bit of personal muckraking. As far as actual phone-related issues go, Gohring does bring one important point to light.

But both T-Mobile and AT&T say they don’t have relationships with Zer01. Without those operators, Zer01 is unlikely to be able to offer nationwide coverage, [analyst Jack] Gold said. If Zer01 had deals with all the other regional GSM operators, it still couldn’t piece together a nationwide service.

Beyond that, Gohring notes that there is no evidence that Zero01 owns any 2100 MHz spectrum, as some Buzzirk (more later) sales associates claim, but an FCC search shows that they’re also not leasing the spectrum.

This doesn’t even address the mutli-level marketing tactic that Zer01 employs. It’s run through Global Verge. Associates sign up, paying $70 up front and $40 per month for support. They then sell Zer01 under the Buzzirk brand. It works like any other MLM program. Associates sign up other associates, and those higher on higher rungs get a cut of those they signed up. Apparently, Global Verge has signed up 50,000 associates so far. That’s a lot of people selling a service that’s not really available right now.

Global Verge is run by Mark Petschel, who doesn’t have the most glowing legal record. He pleaded guilty to securities fraud, and has lost three contract disputes. He was also part of a company, Everge, which was to sell mobile services under the brand BizzBuzz (see the trend?). According to Gohring: “No such launch appears to have occurred.”

I recommend reading the entire article if you’re at all interested in Zer01’s service. But let me put it in the most succinct terms.

We have a decently large audience at Prepaid Reviews. I could easily leverage that audience by signing up to be an associate of Global Verge and then start selling Zer01 services to you, the readers. But I won’t. There’s no way I’d trust this operation enough to do it. I won’t go so far as to accuse them of anything. It’s just not a company I’d put my personal trust in.

We’ll wait for more to emerge on this. It surely will.