Amp’d Mobile said on it raised about $60 million in funding from investors including Vivendi’s Universal Music Group and three venture capital funds to set up a U.S. mobile telephone service.
Privately held Amp’d, founded by a successful creator of mobile phone services to teenagers, said it plans to use the money, with another roughly $7 million from other investors, to launch its brand and deliver everything from commercial games and music to user generated content to mobile phones.
Amp’d, which will rent network space from rival Verizon Wireless, is backed by venture firms Highland Capital Partners, Columbia Capital and Redpoint Ventures as well as Universal, which also agreed to supply Amp’d with music.
It plans late this year to start selling services to young adults in the fiercely competitive U.S. wireless market, where more than 60 percent of people already have phones and rivals will include two fast-growing youth brands and three big rivals with 45 million or more customers on their networks.
Amp’d founder and Chief Executive Peter Adderton, also a founder of Boost Mobile, the fast-growing youth brand of Nextel Communications Inc. , said he plans to compete by luring young hip customers away from his rivals.
“This won’t be your first phone. … This is the young person who is sick and tired with their current mobile service,” Adderton said in an interview, referring to his target customers aged 18 to 35 years old.
From this group, Amp’d hopes to attract people who want to express their tastes through their phone by offering them devices loaded only with media such as music, video and games that the customers themselves have chosen, Adderton said.
Rival services put preloaded options such as ringtones into phones and also let users add their own choice of music and games. But Adderton believes there are enough people who prefer to chose everything themselves to support a new service.
“Our phones are not for everybody,” he said, noting that people who like to be given preloaded options would prefer rivals such as Cingular Wireless, Verizon Wireless or Sprint.
Other rivals include the youth-centric Virgin Mobile USA venture of Richard Branson’s Virgin [VA.UL] and Sprint, which will also own Boost Mobile when it buys Nextel.
SK Earthlink, a venture of Korea’s SK Telecom and EarthLink, also plans to sell advanced mobile services and like Amp’d it hopes to save on costs by using a rival’s high-speed wireless network to operate its services.
Operators including Sprint and Verizon rent network space to some rivals in the hope of getting some revenue from customers they were not able to attract to their own services.
Adderton, which describes Amp’d as a mobile media service rather than a phone service, said he is discussing music content deals with multiple record labels.
He also hopes to let customers download their music from the online music service they prefer, whether Apple’s iTunes, Napster Inc. or another service. Amp’d also plans to distribute video or music content created by its own customers and expects this service to be popular.
Amp’d target customers tend to spend about $60 a month on cellphone services but could spend $10 to $15 more if they are offered interesting enough services, Adderton said.
The executive did not disclose his profit target for Amp’d but noted that other providers that do not build their own networks tend to take about two to three years to see profits.
“If we’re clever we should be able to get there quickly,” he said, adding that he hopes to follow this round of funding with another to help cover the costs of setting up Amp’d.