I had an interesting conversation with Bill Stone, COO of MVNO Amp'd Mobile, which targets the 18-to-35-year-old segment with edgy content, live extreme sports and concerts and full music downloads for 99 cents using Verizon Wireless' EV-DO network. In April, Amp'd closed its third round of financing, raking in a staggering $150 million from a host of new investors that included Qualcomm and Intel Capital and pushed the MVNO's initial capitalization past the $250 million mark. And being an MVNO is not where the company wants to end. In fact, Stone tells us not to lump the company in with the rest of the MVNOs in the U.S. market. Management prefers to call Amp'd a mobile media company.
The goal of Amp'd's executive team is to prove out the mobile media concept as an MVNO and expanding that, whether that means licensing services like Amp'd Live, it's exclusive content, or the way Stone says his company has figured out how to organize content on the user interface so that not one content category dominates and users are enticed to buy content across multiple platforms. This licensing strategy is where Qualcomm's expertise comes in. Qualcomm was successful in pushing CDMA in the early 1990s by getting into the chipset, handset and infrastructure business and proving the business out. And, of course, since Amp'd is using Qualcomm's BREW platform, Qualcomm has a vested interest in seeing Amp'd's strategy work.
First, Amp'd has to make it as an MVNO. Amp'd is part of a new era of MVNOs. Rather than keeping costs down to make money on low ARPUs, the strategy is to spend an exorbitant amount of money to make ARPUs go up. An in-house video studio and $250,000 recording and broadcast trucks are two examples of Amp'd Mobile's unique, some say extravagant, approach to content. The company's strategy is to zoom across the country recording and streaming exclusive video feeds of sporting contests and other popular events to users via a service called Amp'd Live.
There's a lot of scrutiny given the fact that the majority of new entrants, including heavily backed HELIO, seem to be targeting the same demographic: the young, cool, tech-savvy and content-buying 18-to-35-year-olds who supposedly have a lot of disposable income. Mobile content service offerings are a delicate balance given the fact that cheap voice services are still attractive to customers. Even if MVNOs have some really cool content that they may be able to charge more for, they still have to have some compelling voice pricing plans to win customers and garner a big enough pool of subscribers make the whole strategy viable.
How is Amp'd Mobile doing so far? Stone says the company is seeing data ARPU and data consumption significantly higher than the industry average, but the company isn't revealing how many customers it has signed on. ARPU is reportedly higher than $20 per user on the data side. I certainly hope Amp'd can prove there is a viable and profitable strategy when it comes to making the majority of money from data services. That's the goal of all operators as voice services are expected to become a commodity in the years to come. As Stone says, "at the end of the day, the one that executes the best with the best content wins... the burden is on us to execute and compete." - Lynnette