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Investors Amp'd up over MVNO sector(Private Equity Week) Amp'd Mobile Inc. last week received $50 million in strategic funding from MTV Networks, thus forging an exclusive partnership with the most ubiquitous media brand among teenagers and young adults. The Los Angeles-based mobile virtual network operator (MVNO) now has raised $117 million since August, and expects to secure an additional $100 million within the next 45 days. MVNOs have been popping up everywhere lately, as multimedia content providers look for mobile distribution avenues. The basic MVNO concept is to buy or lease unused mobile carrier spectrum at wholesale prices, and then sell the "minutes of use" to retail consumers via a device that can access specified content. Amp'd, for example, last Thursday began selling a Kyocera handset that allows users to access specified content from MTV and other partners for between $30 and $200 per month (price varies based on voice and data requirements). "This is definitely a crowded space," says Jon Auberbach, a general partner with Amp'd investor Highland Capital Partners. "I think you could actually see between 50 and 70 MVNOs get funded altogether... I've already seen four MVNO business plans this week." Tucked between the enthusiasm and possible market saturation is the stark reality that MVNOs are difficult to build successfully. Not only must a company secure enough capital to construct what is essentially a national mobile phone service provider, but it must also stand out from the pack. After all, no one is going to suffer the cost or inconvenience of carrying four or five handsets ("Here's my Disney phone, my HBO phone, my NFL phone..."). Amp'd seems to have addressed some of the potential difficulties with its MTV deal. The company already has raised more venture capital in 2005 than all but six other companies. Backers from its $67 million Series A round in August included Universal Music Group, Columbia Capital and Redpoint Ventures in addition to Highland. Amp'd also has separated itself from any other MVNO that might target teenagers and young adults by partnering with that audience's most dedicated TV networks (MTV Networks owns MTV, MTV2, Comedy Central, Nickelodeon, SpikeTV and more). Of equal import, the deal likely precludes MTV Networks from launching its own MVNO. In terms of additional content, Amp'd also has content sharing arrangements with such providers as CBS, UPN (exclusive access to America's Next Top Model), E! News, CollegeHumor.com and Break.com. It also plans to mirror Apple Computer's iTunes program by selling songs at 99 cents each, which substantially undercuts the current $2.50 per song charged by Sprint. Finally, Amp'd has generated a substantial amount of buzz. The company sent out a limited number of beta handsets last month, and claims to have received positive reviews from some of the teenage users who, despite signing non-disclosure agreements, reportedly posted comments about the Amp'd device on various blogs. On the flip side, Amp'd has received some skepticism from MocoNews.net, an online mobile industry news site affiliated with PaidContent.org. A Nov. 19 post suggested that Amp'd had suffered a series of senior personnel setbacks. Some of the post's facts, however, were either incorrect or now are outdated. The item said, for example, that "Stephanie Henning, who headed Amp'd music and entertainment group, also left and has joined Fox." Henning actually was a consultant to Amp'd, not an employee. |