Amp'd: Verizon threatened to disconnect subscribers

New details on Amp'd Mobile's Chapter 11 bankruptcy filing: In an affidavit filed Monday with the U.S. Bankruptcy Court for the District of Delaware, Amp'd president Bill Stone admits carrier partner Verizon Wireless declared default on the MVNO's wholesale agreement on May 22, demanding a $4.5 million payment within 10 days. "Faced with no other viable alternative, the [Amp'd] board of directors resolved to seek bankruptcy protection on an emergency basis on the evening of June 1, 2007," the affidavit reads. It continues, "In direct contravention of the wholesale agreement and the default notice…Verizon prematurely sent a letter to [Amp'd] purporting to terminate the wholesale agreement 'effective immediately' and asserting its right to disconnect the network carrier services to [Amp'd] customers."  

According to the affidavit, Amp'd boasted subscriber totals in excess of 100,000 at the end of 2006, experiencing "unprecedented growth" between November 2006 and February 2007. At the same time, however, Amp'd "began to experience customer collection problems at rates that were higher than industry norms"--with 90 percent of subscribers on 18-month service contracts, the MVNO "essentially extended customers credit and billed customers for monthly service charges…[finding] a host of credit and collections problems and contributed ultimately to a liquidity crisis." By May 2007, Amp'd "came to the realization that the number of its customers who were likely to be non-paying customers approached 80,000."  

The affidavit adds that Amp'd subscribers consumed more than four million videos, songs and mobile games in the first quarter of 2007, doubling the previous quarter's two million total downloads and bringing the total volume of Amp'd downloads to more than six million to date.

For more on the Amp'd filing:
- read this affidavit

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