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Update: Apparently the bankruptcy was triggered because Verizon, which is the carrier that amp'd uses for their service, asked ever so gently that they pay $4.5 million of the $33 million owed within 10 days. Then Verizon threatened to up and shut amp'd down - though it's possible they only did that because their lawyers told them to. It's looking like the future of a major cellular provider is going to be resolved where God meant it to be -- in the courts.
Read: Verizon Threatens To Shut Off Amp'd (Phone Scoop)
MVNO's have a rough time of it, it seems. I'd thought that amp'd mobile was doing alright, but I clearly thought wrong. Here's the "ouch" part of amp'd's (a lot of apostrophes there) business plan:
Apparently, those free-spending youths don't care much for paying their cell-phone bills. A court motion filed on June 4 explains that Amp'd "experienced an unprecedented growth of subscribers" between November, 2006, and February after running ads on MTV (VIA) about the wireless phone company's lineup of mobile music and video content.
Collecting payments from these subscribers proved to be a challenge, however. "Approximately 90% of the debtor's customers were on 18-month service contracts," according to the filing. "The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis." By May, the number of nonpaying customers reached 80,000. That's nearly half of Amp'd's current customer base of 175,000 subscribers.
There's rumor that Verizon might snap them up, but then again, there were rumors that Verizon wanted to snap up Alltel. I'd advise against it, Verizon. 50% of amp'd customers aren't paying their bills? The hip and young demographic may seem appealing, but "hip" and "young" apparently also means "poor."
Read: Press Release via Gadgetorama
