Jun 05 2007
Amp’d gets Punk’d
Apparently, Ampd’s bankruptcy is related, at least in part, to bad debt from subscribers:
Apparently, those free-spending youths don’t care much for paying their cell-phone bills. A court motion filed on June 4 explains that Amp’d “experienced an unprecedented growth of subscribers” between November, 2006, and February after running ads on MTV (VIA) about the wireless phone company’s lineup of mobile music and video content.
Collecting payments from these subscribers proved to be a challenge, however. “Approximately 90% of the debtor’s customers were on 18-month service contracts,” according to the filing. “The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis.” By May, the number of nonpaying customers reached 80,000. That’s nearly half of Amp’d’s current customer base of 175,000 subscribers.
That’s what happens when you target the low-end “cool” market. Not that it’s an excuse, but it does explain a lot.
