Xero inches closer to ad-supported offering

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LOS ANGELES-Mobile virtual network operator Xero Mobile Inc. said that it is now testing its technology and service in preparation for a 2007 commercial service launch.

Xero plans to target college students with a large number of free handsets and low service costs, subsidized through TV-style video ads on its phones. According to the company’s Web site, Xero plans a full launch in January. Meanwhile, “Xero will begin testing with a limited subscriber base prior to the full launch,” the company said in a statement.

Xero says that it will use patent-pending video composition and compression techniques to “deliver high-quality video advertising at substantially lower costs than existing download and streaming solutions.” The company will rely on “real-time reverse billing” to grant subscribers immediate air time credits after they watch advertisements.

Xero announced last week that it was in negotiations to be acquired by Advanced Mobile Communications Inc. in exchange for newly issued shares of stock, and that the transaction would take six to eight weeks to finish. Xero was initially formed by a reverse merger with a publicly traded company, Desi TV Inc.

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