Worst of the Week: Amp’d and the pre-emptive bankruptcy strategy

Hello!
And welcome to our Thursday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCR to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
So Amp’d filed for Chapter 11 bankruptcy. If you were totally lame, you would say that Amp’d took a hint from “Spinal Tap” and turned its amp up to Chapter 11. You would say that only if you were totally lame, though.
Personally, I blame Lil’ Bush and his friends, Lil’ Cheney, Lil’ Condi and the rest. See, everything those Bush crazies touch goes bad: Iraq, the environment, civil rights-and now Amp’d. I hope that Amp’d in its bankruptcy filing lays the blame for its predicament squarely at the feet of the Bush administration. Unfortunately, I’m too lazy to check if it did.
Anywho, Amp’d is now seeking protection from its creditors, the most vicious of which appears to be Verizon Wireless. According to the bankruptcy filings from Amp’d, the company began to run into troubles after it hit the 100,000-subscriber mark late last year. Amp’d said that about 90% of its customers were on 18-month postpaid service contracts, and by early 2007 the company “began to find a host of credit and collections problems that contributed ultimately to a liquidity crisis.”
By May, Amp’d said it had about 80,000 non-paying customers-or nearly half its customer base, given that the MVNO said it was close to reaching 200,000 subscribers at that time. Amp’d tried to raise more money, hoping to stave off bankruptcy, but a last-ditch effort fell through when Verizon Wireless demanded a $4.5 million loan payment and accused Amp’d of defaulting on its wholesale agreement. Verizon Wireless then sent a letter terminating the wholesale agreement and threatening to disconnect Amp’d subscribers from its network.
Isn’t Verizon Wireless mean? I think Amp’d should have just used the same strategy as many of its subscribers apparently employed: “What bill? Oh, right. That bill. I forgot about it. . I mean, the check is in the mail. Yeah, that’s it. The check is in the mail. Didn’t you get it?”
I personally feel bad for Amp’d. I did get a chance to check out one of their phones, and I must say: The Amp’d service is pretty darn cool. You can play racing games and watch ultimate fighting matches and laugh at Lil’ Bush and all sorts of fun stuff.
In fact, I just might make the switch to Amp’d now, seeing as how the company’s bill-collection service is overwhelmed and I probably wouldn’t have to pay for the service for months and months, if at all. (As a side note, any of you RCR Wireless News subscribers who haven’t renewed your subscription, please do so now.)
But I’m not worried about Amp’d; I’m sure they’ll be fine. After all, Leap went through bankruptcy, shed a ton of debt, and is now expanding into more markets than ever. Indeed, industry watchers are now speculating that Amp’d will ditch its MVNO business and emerge from bankruptcy as a fully formed content provider. Bankruptcy is so awesome!
In fact, Amp’d Mobile’s plan is so good, I’ve developed my own business plan based on the Chapter 11 escapades of Amp’d. Here’s how it works: I’m going to PRE-EMPTIVELY file for bankruptcy in order to raise money for my startup company. That will save me the extra steps of raising money and then filing bankruptcy; instead, I can just start out with excess funds and no debts.
Would anyone like to invest in my pre-emptive bankruptcy startup? I’m going to be the first entrant into a market that no one has ever heard of: mobile social networking. Bingo.
OK! Enough of that. Thanks for checking out this Worst of the Week column. And now, some extras:
–It took longer than I expected: In a press release about its new mobile video product, MidniteMonkey boasts that it “brings a unique twist to the mobile TV buzz: adult entertainment.” MidniteMonkey said it will deliver its adult offerings “off-deck,” meaning that the company won’t operate through a carrier. Strangely, though, the company said that it will “operate our service in accordance with wireless standards as if we were working with a wireless carrier.” .I don’t even know what that means.
–The Coca-Cola company announced it will offer a mobile social networking service based on its Sprite soda-pop brand. To be honest, I really don’t understand the whole mobile social networking thing, but at least I can imagine that it would be interesting to some people. A Sprite-branded service, however, just sounds silly.
–A German software company is offering a mobile video service where cellphone users can watch the Space Shuttle Atlantis take off. The site, http://wap.space2phone.com, will show the launch scheduled for tomorrow at 7:38 p.m. Eastern Daylight Time. Everything about this is totally cool.
–Nokia Siemens Networks put out a press release this week that said three of its Finnish workers were detained briefly in Iran while on a private fishing trip. Not to worry, though, the company said the workers are headed home, and everything is good. But this news simply reinforces one of my most cherished personal beliefs, a tenet I guide my life on: To never, ever go fishing in Iran.
I welcome your comments. Please send me an e-mail at mdano@crain.com.