Amp'd to Tap Japan's Mobile Market

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In effect, Amp'd may end up being the first U.S. carrier that also acts as a mobile content aggregator, essentially eliminating the role of middleman between the creators of content and the carriers that put that content on phones. That would bring it into competition with the likes of InfoSpace Mobile and Hands-On Mobile as well as large content creators such as Electronics Arts (ERTS) and American Greetings. With video and music becoming available on more handsets and networks worldwide, the mobile-content business is booming.

Ramping Up Stateside

In Japan, mobile-content sales rose 21% in the past year, according to the Japanese Ministry of Internal Affairs of Communication. According to Japanese government reports, more Japanese access the Web via cell phones than through PCs.

One sign that other U.S. wireless service providers may follow Amp'd's lead: InfoSpace (INSP) recently said a carrier would not renew its ringtones content contract with InfoSpace. The carrier, which wasn't named but is believed to be Cingular, said it plans to establish direct relationships with music labels for the ringtones instead. Another player, Virgin Mobile, has been paying for creation of unique content, such as a short-text message novel available only to subscribers.

For Amp'd, the extra income will certainly come in handy as the company ramps up its service in the U.S. So far, the service, which runs over Verizon Wireless's network, has gained 50,000 subscribers, and it's aiming for 100,000 users by yearend, says Amp'd Mobile President Bill Stone. But even at $100 in average subscriber revenue a month—twice the average for most other carriers—it still might take several years for Amp'd to recoup investments. The content aggregation business could provide nice supplemental revenue to keep Amp'd going. Its international forays are also bound to enrich content Amp'd makes available to its U.S. subscribers. Perhaps it will find the next Pokémon, says Hyers.

Global Aspirations

Following ESPN Mobile's decision to stop providing service at the end of the year, the talk has been that mobile virtual network operators (MVNOs) like Amp'd—using other carriers' networks and marketing to specific market segments—are doomed to failure (see BusinessWeek.com, 10/30/06, "ESPN's Cell-Phone Fumble"). Thanks in part to its search for new revenue streams, Amp'd could prove different. As MVNO subscribers rise from 7% of all U.S. cell-phone users today to a percentage in the low teens by 2012, "Amp'd has a good possibility of making it," says Hyers.

And Amp'd isn't stopping at selling content to Japan. Back in August, the company announced a similar deal with Canada's Telus, which will start offering Amp'd's brand and content in early 2007. And Amp'd plans to announce it's entering more international markets by yearend, Stone says. To that end, on Oct. 30, Amp'd announced a slew of executive appointments. Its new chief operating officer, Sue Swenson, had served as chief operating officer of Deutsche Telekom's (DT) U.S. wireless unit T-Mobile and president and COO of carrier Leap Wireless International (LEAP). "It's about taking Amp'd to the next level," Stone says. Or at least on an adventurous field trip.

Kharif is a writer for BusinessWeek.com in Portland, Ore. With Kenji Hall in Tokyo