• by Mark Walsh  @markfwal, August 31, 2007

In retrospect, Hype'd would've been a better name than Amp'd for the heavily-backed mobile startup that went bankrupt in July after only two years in business. From the beginning, the so-called mobile virtual network operator, or MVNO, seemed a throwback to the dot-com days when investors eagerly poured vast sums into grandiose Internet ventures.

Raising a reported $360 million in venture dollars, Amp'd aimed to be the mobile phone of choice for young hipsters, offering a Las Vegas Strip's worth of entertainment options in a sleek, costly handset. The showman behind it was Peter Adderton, a brash Aussie entrepreneur in the Rupert Murdoch mode, who had founded Boost Mobile, an Amp'd precursor now owned by Sprint Nextel.

Murdoch proved himself tuned in to the Web 2.0 zeitgeist by buying MySpace, the rapidly-growing online social network. Adderton and his backers, on the other hand, bet on mobile entertainment when most U.S. cell customers still used their phones primarily for talking.

Of course, Amp'd hasn't been the only MVNO to implode. Piggybacking on the major carriers' networks, these virtual operators focused on marketing and customer service while leaving infrastructure issues to the carriers. Like Amp'd, they typically aimed at a well-defined audience presumably willing to pay a premium for niche content.

But even Mobile ESPN, the sports network's MVNO, bombed earlier this year after rabid fans failed to materialize in sufficient numbers to make it viable. A custom handset initially priced at $400 and the fact that ESPN content was already available wirelessly were factors in its demise.

Helio, an Amp'd competitor backed by $440 million from South Korean carrier SK Telecom and EarthLink, appears to be on the same trajectory. In its second-quarter earnings report in July, EarthLink said it expects an equity loss of $160 million to $180 million on Helio in 2007. EarthLink and SK Telecom also agreed to provide an additional $100 million to help fund Helio's day-to-day operations.

Despite a big marketing push, the 100,000 subscribers Helio has to date is still far short of its goal of signing up 3 million by 2009. Apple's highly-anticipated iPhone pulled in more customers in two days than Helio has in the last year.

Chances are if someone's willing to shell out $500 for a high-end phone, they'll choose the iPhone over a competing device which might not be serviced a year from now.

In the midst of the MVNO wreckage it may seem odd that Virgin Mobile USA, the teen-oriented service which ignited the MVNO boom, is planning a $506 million initial public offering. Virgin Mobile's growth was built on making it easier for teens to get cell-phones by offering a pre-paid rather than a subscription service. Unlike Amp'd, it succeeded by catering to mobile have-nots rather than haves.