• Business Week, Tuesday, June 5, 2007 11 AM

The Mobile virtual network operating business, in which mobile phone service operators sell content subscription packages by licensing spectrum from a big mobile network like Verizon, is a tough business. First came the demise of Mobile ESPN, which offered real-time sports scores and highlights, and now, Amp'd Mobile, an "edgy" upstart MVNO with content deals catering to wealthy teens and 20somethings, has filed for bankruptcy, citing--get this--the unwillingness of subscribers to pay.

Either the kids either aren't paying or they're using bad credit cards, which has contributed to "a liquidity crisis," according to the company's filing. Of its 175,000 subscribers, an astonishing 80,000 are nonpaying. But Amp'd's infrastructure also proved incapable of dealing with the "unprecedented" subscriber growth that flowed in between November and February, thanks to a marketing campaign on MTV, and its outstanding debt to creditors, approximately $100 million. Verizon, its network operator, is owed $33 million of that; because of Amp'd can't pay, the telecom giant terminated its wholesale agreement, effectively forcing the Chapter 11 filing.

Is the Amp'd downfall a sign of things to come from other MVNOs? Virgin Mobile USA, which is preparing an IPO, is also in the red, though losses are narrowing. Meanwhile, Amp'd's biggest competitor Helio, seems to be doing great, on pace to make $130 million in the next year. Yes, but that may change once the Apple iPhone arrives on June 29.

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