by Carlo Longino

Didn't See This One Coming, No Not At All -- Amp'd Files For Bankruptcy

from the not-surprising dept

About two years ago, a group of execs that had founded the successful Boost Mobile youth-focused brand for Nextel announced they were starting a new virtual mobile operator called Amp'd. Amp'd would also target young users, but it would differentiate itself by charging high prices and, in exchange, offer all sorts of multimedia content. From the outset, we were skeptical because the company was focusing on content, and not communication -- a strategy that's proved untenable for other MVNOs, and similarly failed for Amp'd, so it was forced to try and attract users by slashing voice prices. Still, the company's business plan (poor strategy and all) helped it pull in $360 million in venture funding, with a good chunk of that coming even after the company displayed an inability to attract subscribers. So, in what's one of the least surprising pieces of news we've seen in a while, Amp'd has filed for Chapter 11 bankruptcy. The company spins bankruptcy by saying, "As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand." The company was beset by operational problems (as well as poor strategy), so there's some truth in that, but with so few users, it's not much of an excuse. Amp'd says it hopes to secure more financing and keep operating, though its top creditors are Verizon Wireless, its network provider, and Motorola, which provides it with handsets, owing them a combined $49 million. We would say that Amp'd will have a hard time finding more investment, but given that the company was able to raise so much money from VCs even after it was clear it was headed for the deadpool, you never know.

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  1. identicon
    Anonymous Coward, 4 Jun 2007 @ 2:41pm

    Will Helio take Earthlink down with it?

    You could build a REAL cellular network for what Earthlink and SK have spent on becoming a failing MVNO.

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