Worst of the Week: CompuGlobalHyperMegaNet and other great MVNOs

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 RCRNews.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
So Amp’d Mobile is no more. The company’s assets are for sale and its service is shutting down. I’m betting those two or three Amp’d customers who actually paid their bills are pretty steamed about the whole thing. I know if my cellphone provider suddenly told me I’d be without service within a week or so, I’d be pretty crazed with rage (more so than usual).
But what are the lessons that we as a wireless industry can learn from the flame-out of Amp’d Mobile?
Well, I think the first thing that’s clear is that companies claiming that their offering is going to revolutionize the industry may not always be right. In fact, I think it’s safe to say that 99% of all “revolutionary product” claims actually turn out to be total crap. After all, most political and social revolutions end up getting squashed by the status quo. Just ask George McGovern!
I think another good lesson to learn is that there are a lot of people out there who don’t pay their bills. Who knew?
I also think it’s clear that the entire MVNO market may want to do some reconsidering. Think about it: Mobile ESPN quit after just eight months, and Helio is burning through something like $40 million per month, and has around 250,000 subscribers to show for it. And though Virgin Mobile USA touts around 5 million customers, the company only recently turned a profit-and the wireless market is only going to get tighter and more competitive in the coming months and years.
So what does that mean? I think it means that regular people are not stupid. Consider: Would you buy a car from a company you have never heard of before, or would you buy a car from an established manufacturer like Ford or Toyota? (Personal note: Only consider buying a Ford if you are a professional car mechanic or if you live next door to one.)
Would you buy a house you’ve toured and inspected, or one you know nothing about? Would you buy a Toshiba laptop or a Xuio laptop? Would you buy insurance from State Farm or Super Awesome Insurance Corp.?
I think the same is true for established brands that want to move into the MVNO space: Would you buy a jet ski from Google? Would you want to get a haircut from Apple? It would be the same as eating at a Verizon Wireless-branded Mexican restaurant.
My point is that cellphones have become an important part of a lot of people’s lives, and I think most people would be unwilling to trust such a critical service to a brand they have never heard of, or a brand completely unrelated to wireless. I’m not saying it’s impossible for new entrants to be successful-if you’re just buying a $10 prepaid card, who cares where it comes from?-but if you’re agreeing to a two-year contract, with a total value of $1,200 or more, I’m thinking you would be very cautious about what sort of company you’re signing on with.
However, my whole premise assumes that most people are cautious about the things they do and buy, and I guess the jury is still out on that one.
Oh, yeah, and there’s one more lesson to be learned from Amp’d Mobile: It is possible to spend $400 million in just a year and a half and have essentially nothing to show for it. If I had to spend $400 million in a year and a half, I’m pretty sure I would have a lot of stuff to show for it. Mainly sports cars.
OK! Enough of that. Thanks for checking out this Worst of the Week column. And now, some extras:
–Virgin Mobile USA announced that rapper T.I. is the latest “artist” to join the carrier’s “first dibs” exclusive ringtone program. I’m not entirely sure about this, but I think T.I. stands for Texas Instruments. And I must say, that’s a strange name for a rapper.
–More idiotic ringtone news: Spike TV announced it will sell ringtones from comic book writer Stan Lee. This is so stupid I’m not sure where to start. Let’s see. . First of all, why is Spike TV selling ringtones? Secondly, does anyone outside of Nerdville, USA, know who Stan Lee is? (Hint: He created a number of famous comic book characters including Spider-Man and the Hulk.) Third, what would a Stan Lee ringtone even sound like? I’m guessing it would go like this (in Stan Lee’s voice): “Hey, can you believe this idiot actually bought a ringtone by Stan Lee?” Important Disclaimer: I am a resident of Nerdville, USA.
–“Hello Kitty: Nuclear Winter.”
–Namco announced a new mobile game called “Snoopy the Flying Ace,” based on the popular “Peanuts” comic strip. In the game, players pilot Snoopy’s airplane and try to drop anthrax-laced cluster bombs on Charlie Brown and the rest of the gang. . Actually, that last part about bombing Charlie Brown is not really true, but wouldn’t it be cool?
–And finally, astute reader Jamie sent this in: www.sniflabs.com. ‘Nuff said!
I welcome your comments. Please send me an e-mail at mdano@crain.com