Leap Wireless Files Chapter 11

When my oldest son started driving I bought him a cell phone. “What”, you ask, “How can you afford to give a cell phone to a teenager?” It was a Cricket phone. This service offered only local calling with no roaming and unlimited air time. It is the perfect service for a suddenly mobile teenager. He had a phone for road emergencies, I could check up on him and I got my home phone back. He’s nineteen now and he still uses this service but now the services has been upgraded to offer 500 long distance minutes for about $3 more a month. This is very handy with us living in two different cities.

Now you can understand my consternation in hearing that Leap Wireless has declared Chapter 11 bankruptcy. Leap Wireless is the parent company of Cricket. A year ago the stock was selling for $10, now it sells for less than 8¢. Their build out has resulted in about $1.8 billion in debt and they are having problems paying it back.

Hopefully they will be able to reorganize and get out from under the bankruptcy courts in fairly quick order but I’m afraid the major players in the industry may decide to push them out of the market while they are weak. You see, Leaps threat to the major carriers isn’t in their wireless market, its in their wired market. A lot of Leap’s customers are using their Cricket phone to replace their home phone. Verizon, Cingular, SBC all have interest in selling wired service to homes.