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Amp'd Files for Bankruptcy Protection

by Terrence O'Brien on June 4, 2007 at 04:39 PM


Well, it looks like Amp'd Mobile is having a little trouble doing what businesses are supposed to do -- namely, make money. Earlier today, the youth-oriented MVNO (Mobile Virtual Network Operator) filed for Chapter 11 bankruptcy protection.

MVNOs are essentially boutique mobile operators that use the networks of the large and established carriers, but offer distinct content, handsets, and calling plans. So even though Amp'd may look like a completely different carrier, it actually uses Verizon's network. Other examples of MVNOs include Helio (which uses Sprint's networks), Voce (uses AT&T/Cingular's network), and Virgin Mobile (uses Sprint's network).

Amp'd owes $33 million to Verizon and $16 million to Motorola (which makes its handsets), among other debts. In total Amp'd is about $100 million in the hole, which is more than its total assets.

As is the case with many companies that file for Chapter 11, Amp'd is not down completely, it's just buying time. If you have an Amp'd Mobile phone, rest easy -- your service isn't going anywhere, for now. Amp'd's stumbling is just the latest case of a much-hyped MVNO going bust (last year, ESPN Mobile closed down, only to be reborn as a service on Verizon Wireless handsets.)

Amp'd will begin to reorganize in hopes turning a profit -- or at least being able to pay its bills -- but the niche appeal of most MNVOs is proving not to be the best business model on earth.

We like MVNOs, since they're like indie, customer-driven alternatives to the big behemoth major carriers, so we're keeping our fingers crossed for Helio and Virgin Mobile, among the few left that so far are at least keeping up appearances of solvency.

From The New York Times, CNET, and Engadget.

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Tags: amp'd, cell phone, CellPhone, mobile, mvno

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