Amp’d Canada going belly up?

With Amp’d Mobile USA set to close up shop today, can the Canadian operations be far behind?

The mobile virtual network operator, as tech and telecom nerds refer to this reseller type of cell phone service provider, is closing up shop in the United States today, according to published reports.

No word yet from Amp’d Mobile Canada whether it’s going to keep selling cell phone service though one report seems to indicate the company will sell off its Canadian division as early as next week.

Chris Houston, Amp’d Mobile Canada’s president, didn’t reply to an e-mail query yesterday. No official word from Telus officials either. Telus, of course, announced a $7.5-million investment in Amp’d Mobile last year.

With HQ winding down operations, one can only assume Amp’d Canada and the company’s other international divisions will soon cease to exist. What’s the spoke of a bike worth without the wheel anyways?

Amp’d’s problems in Canada and elsewhere are numerous. In Canada, high mobile data prices and a poor selection of cell phones are just two reasons Amp’d struggled after its March entry into Canada. Apparently, one in two Amp’d phones bought from Best Buy Canada were returned less than a month after purchase.

Amp’d resells air time from Telus and targets niche audiences with exclusive content from organizations such as the Ultimate Fighting Championship, whose matches it broadcasts over its mobile phones.

Problem is very few people want to watch a UFC match on a 2″ Motorola Razr screen - not even the under-25 crowd.

Overall, Amp’d high-profile flameout calls into question the future of MVNO’s in Canada.

MVNOs don’t own spectrum and have to buy network air time from a national cell phone service provider such as Rogers.

Amp’d has to give a cut of its profits to Telus and the content partner, which cuts into already-slim profit margins.

Furthermore, Telus or another national service provider doesn’t want an independent MVNO like Amp’d to offer cut-rate prices, which makes it difficult to attract customers even in a relatively underpenetrated country (60%) like Canada.

Not a pretty outlook for pure play MVNOs that want to enter Canada.

Even in the United States, where there are far more wireless customers to draw upon, pure play MVNOs, like ESPN Mobile service, have flamed out. Helio is the one exception.

Good bye Amp’d - we hardly knew ya. Other MVNOs may not be far behind.

July 24, 2007 | Filed Under News Items and Commentary