Amp'd Mobile turns to bankruptcy

Los Angeles (CA) - The specialty, youth-targeting cell phone service provider has filed for Chapter 11 bankruptcy, citing the fact that almost half of its customers were delinquent with paying their bills.

Amp’d Mobile, which specializes in offering music and video services to its customers, said it faces a "liquidity crisis". According to court documents, around 80,000 of its 175,000 subscribers were recorded as nonpaying customers.

The bankruptcy proceedings, which Business Week reports are taking place in Delaware, say that Amp’d owes more than $100 million to creditors, with about one third of the debt owed to Verizon. Chapter 11 bankruptcy means Amp’d will try to liquidate its current assets and reach settlements with creditors, while the company tries to continue its normal business operations.

The mid-2000s was a big time for mobile virtual network operators (MVNOs), which offer their own mobile services but borrow bandwidth from another provider. In the case of Amp’d, it borrowed Verizon’s mobile infrastructure to facilitate the normal phone operations.

Other such services, most notably Disney’s Mobile ESPN service, have also fizzled out. According to Blycroft Publishing, there were more than 220 active MVNOs in November of last year. Though they’re becoming increasingly unpopular in the United States, MVNO services are gaining ground in Europe, thanks to support from the European Commission, which wants more competition in the mobile marketplace.