Mobile Meltdown

The company also spent heavily on content. Amp'd had its own mobile outdoor broadcasting trucks to simulcast extreme-sports events on its handsets and its own in-house recording studio to produce its own concerts. It also licensed a lot of content from MTV Networks, UFC, Playboy Enterprises, major record labels, and video-game companies. (Of the licensors mentioned in Stone's bankruptcy affidavit, Playboy and Live Nation declined to comment, and UFC and MTV didn't respond to repeated requests.)

All these costs meant that Amp'd needed customers, and quickly. After a sluggish start--The Wall Street Journal reported in June 2006 that Amp'd had attracted fewer than 10,000 subscribers in its first five months--the company picked up the pace. By September, Amp'd issued a subscriber forecast of more than 100,000 customers by the end of the year, a goal that it met. In hindsight, given the high number of nonpaying clients cited in the bankruptcy, it's natural to wonder whether Amp'd was overzealous in its customer-acquisition efforts.

The half-dozen former executives all question the company's operating depth. Amp'd had hired Sue Swenson as its chief operating officer in October 2005, but a noncompete clause with her previous employer, T-Mobile, prevented her from joining until a year later. In the interim, the job fell to Stone, a former Verizon Wireless executive whose background was in marketing, not operations. The former employees say that few experienced operations folks were on hand to solve the myriad problems that Amp'd encountered. For example, there seemed to be no way to distinguish between customers who didn't pay and those who simply weren't being billed. When Amp'd started getting complaints about poor service, "it kept adding customer-service reps instead of finding out why they had so many calls," one of the former executives says.

Cash flow clearly suffered. On May 22, Verizon Wireless informed Amp'd that it was in default of its broadband service agreement and that if Verizon Wireless didn't receive $4.5 million in 10 days, it would pull the plug. Amp'd went back to its investors for additional funds, and as late as the morning of June 1, Stone indicated in his bankruptcy affidavit that he believed the company would get the money it needed. But the last-minute attempts fell apart, and Amp'd sought bankruptcy protection from its creditors that evening. The bankruptcy filing listed $164 million in liabilities, against assets of just $46.6 million.

Amp'd execs asked a bankruptcy court judge for permission to sell its assets at auction. Verizon Wireless, Amp'd's largest creditor--Amp'd owes the carrier approximately $33 million--could purchase the Amp'd content library, likely its most valuable asset, for its V Cast service.

It is ironic that the Amp'd flameout came just four weeks before Apple's iPhone debuted. One former Amp'd executive recalls meeting with a Radio Shack executive just before the Amp'd service launched: "He said, 'You only have 18 months until everyone catches up to you.'" Eighteen months out, Amp'd filed for Chapter 11, and it is the iPhone that now carries the torch for Adderton's vision of the future for mobile entertainment.