Zer01 encounters new setback

Zer01 Mobile, the company that says it can deliver a true unlimited mobile-phone service, announced on Thursday that it has ended its relationship with network marketing company Global Verge.

It's unclear now who will sell the service, which was supposed to launch on July 1, but as of yet has not. Zer01 claims to use patent-pending technology that lets it deliver true unlimited voice and data services for $70 a month without a contract.

The operations of both companies have been under scrutiny since they continue to miss deadlines and hire executives with historical or long-standing legal problems.

Zer01 now blames Global Verge for the issues that have cast doubt on its legitimacy.

Reports have erred by applying facts about the backgrounds of Buzzirk executives to Zer01, the company said Thursday. Buzzirk's parent company, Global Verge, was founded by a man who was convicted for securities fraud. Executives who replaced him to lead the company have been involved with multilevel marketing programs that have come under fire and been involved with legal battles.

But Zer01's parent company, Unified Technologies Group, itself raises questionable claims.

"An international, diversified technology consulting, and holding company," UTG says it has received regulatory approval to launch banking operations under the name Yorkshire Capital Holdings.

The Federal Reserve, which regulates the banking industry, does not show UTG or Yorkshire as organizations authorized to offer banking services in the U.S.

UTG also has a philanthropic arm with a Web site that includes text that is nearly identical to text on the Bill & Melinda Gates Foundation Web site and includes a section that appears to have been copied directly from that foundation's Web site.

After initial reports questioned UTG and Zer01, UTG stripped its Web site, including executive biographies, many of which included vague information.

Zer01 also continues to argue that it has to honor the confidentiality of business partners that provide interconnect agreements, in response to doubts about how its offering might work. The company says that it can offer nationwide service using GSM (Global System for Mobile Communications) technology. However, both AT&T and T-Mobile -- the only two nationwide GSM operators -- say they don't have relationships with Zer01.

In addition, Zer01 invites anyone to visit the patent office to check that the company has registered for its Veritable Mobile Convergence technology. However, the patent number that Zer01 has provided indicates a provisional patent, which the patent office cannot comment on in any way.

Zer01 also invited industry leaders to visit Zer01 at conferences to get a demonstration of the service. However, some analysts and journalists say that after being invited to do just that, they were ultimately declined. Derek Kerton, an analyst with the Kerton Group, was invited to try the product at the CTIA conference earlier this year, but ultimately company representatives refused to demonstrate the phone service.

On July 22, Zer01's CEO said in a Laptop Magazine story that journalists would be receiving trial phones the following week. No reports have surfaced yet from journalists who say they've received test phones.

Zer01 did not immediately reply to a request for information about how the service would be marketed, now that the company has severed its relationship with Global Verge. Zer01 has positioned itself as a technology provider that another company would market to end-users.

Global Verge has said it signed up 40,000 people, who have paid at least $70 in initial fees and $40 a month for back office services, to a program for selling the service to end-users. Global Verge recently said it would start paying commissions to those sales people on Aug. 10, after delays.

Global Verge has no contact information on its Web site and has not replied to past requests for comment.

Copyright © 2009 IDG Communications, Inc.

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