Just a few years back, dozens of wireless service providers clamored for a piece of the underserved, lucrative demographic of callers aged 18-35. Ventures such as Virgin USA, Helio, and Mobile ESPN began reselling mobile phone service purchased from the major providers, spending big bucks to court free-spending young consumers interested in mobile music and video. Unfortunately for these companies, dialing for dollars has been more difficult than it seemed.
An overabundance of companies supplying service forced some providers to rethink their strategy. Mobile ESPN, for example, was quickly abandoned. Virgin USA still sees opportunity in low-cost prepaid services, but it'll be asking for roughly $100 million from investors through its upcoming IPO. The latest sour news in the pay-as-you-go mobile phone sector comes from Amp'd Mobile, which has announced that it will enter Chapter 11 bankruptcy to restructure debt.
Amp'd has received plenty of buzz -- and criticism -- since launching its service in December 2005. The company has spent millions targeting a coveted demographic that's hip to using cellular phones as a media hub -- callers who spend more than $100 monthly on their mobile bill, roughly double the amount of the typical wireless user. Amp'd even began producing a wide variety of exclusive video content on its service's wireless channels, covering extreme and alternative sporting events such as the Ultimate Fighting Championship and Supercross.
The bankruptcy at Amp'd illustrates smaller operators' difficulties in navigating a crowded pool of heavyweights such as AT&T
This news doesn't spell the end for Amp'd -- it just means that the company's eyes were bigger than its budget, and that it couldn't raise additional funding fast enough. Much like Craig McCaw's Clearwire
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Fool contributor Dave Mock, author of The Qualcomm Equation, can endure a bit of static if he eventually gets a nice, clear call through. He owns shares of Qualcomm and Motorola. Best Buy is a Motley Fool Stock Advisor recommendation. The Fool has a disclosure policy.
