First you take my home, then you take my phone!

We've all heard the noise about the subprime housing debacle. Everyone is to blame........the deadbeat customers, the suspect lenders and even the hedge funds that trade this risky debt. Well, it doesn't just stop with homes. Risky lending has finally hit the cellular industry. Amp'd Mobile is done!

What can you say? When you target customers that NO OTHER CARRIER would touch with a 10 foot pole, you're asking for trouble. When young, fickle customers with little or no credit make up the majority of your user base, you're asking for trouble. When you allow people to pay as they go, you add to the volatility and unpredictableness of your revenues.........say it with me...........YOU'RE ASKING FOR TROUBLE!

You raise $360M in VC funding, but you can't pay your Verizon bill ($41M)? How do you rack up $370,000 a day in charges? And that's just with Verizon! Who is watching the finances?

To add insult to injury, you still advertise the phone service and sell the equipment in Best Buy and Circuit City! Down right despicable!

Now here is the ultimate slap in the face. Your current paying customers are greeted with the following explanation:



Is this a sign of things to come? I'm not the only one concerned for all the other MVNOs (Mobile Virtual Network Operators). On paper, it seems like a great idea.

You don't need to pay billions to create the infrastructure.
You don't need to hassle with subscriptions or customer service.
You can charge ridiculous premiums to customers who have no other options.
It's prepaid, so you earn interest on the float.

Here's the rub. If you own a MVNO, you are in the risk management business! If I was a partner at a PE firm, I'd buy Amp'd for 5 cents on the dollar. I'd hire some guys from Capital One or Wall Street and apply the appropriate risk management systems. Then, I'd ride the wave back up (during the next bubble).