Amp'd Mobile Files For Bankruptcy Protection - InformationWeek

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Amp'd Mobile Files For Bankruptcy Protection

Subscribers shouldn't panic just yet. Amp'd Mobile will continue normal business operations during the reorganization process.

Amp'd Mobile, a youth-focused Mobile Virtual Network Operator (MVNO), on Monday said it filed for Chapter 11 bankruptcy protection.

The company, which licenses spectrum from cellular carrier Verizon Wireless and resells cell phone services that include music, video, and entertainment content, issued a statement saying its "backend infrastructure was unable to keep up with customer demand" because of the company's rapid growth. Filing for bankruptcy is a necessary action to sustain momentum in the marketplace, Amp'd Mobile said.

Amp'd Mobile loses 7% to 8% of its subscribers each month, according to Levick Strategic Communications, a crisis management firm based in Washington, D.C.

Subscribers shouldn't panic just yet. Amp'd Mobile will continue normal business operations during the reorganization process. The reorganization process includes tapping investors for financing and improving the company's backend infrastructure.

An MVNO can generate millions of subscribers and enjoy success selling customized services to a targeted group of people, as is the case with Virgin Mobile. The company launched its service in July 2002 and uses Sprint's cellular network to offer pay-as-you-go services. Like Amp'd Mobile, Virgin Mobile also targets the youth.

But often trendy multimedia cell phones and entertainment content are not enough for MVNOs to thrive. After being in business for less than a year, Disney in April shut down Mobile ESPN on Sprint's network in pursuit of a different nationwide wireless carrier. Mobile ESPN was re-launched as ESPN MVP last month on Verizon Wireless' network and is now only available to Verizon Wireless subscribers that have V Cast-capable cell phones.

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