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Chit Chat Files Chapter 11 Bankruptcy

Chit Chat Holdings, the parent company of Sprint MVNO Chit Chat Mobile has filed Chapter 11 bankruptcy in an effort to settle a billing dispute with Sprint.

According to a report published by the Wichita Eagle, Chit Chat claims that data usage reports from Sprint were over 60 days late. The late reporting allowed customers to use large amounts of data undetected. Chit Chat spokesman, John Hennessy told the Eagle that some customers used as much as 10GB per day and 300GB in a month. According to a Hennessy, the company owes Sprint "several hundred thousand dollars". The company believes that it shouldn't be held responsible for Sprint's failure to provide timely usage information.

Chit Chat's data plans are capped, customers pay for a fixed amount of data, for example 3GB for $30.  If Sprint's data reporting was as seriously delayed as Chit Chat claims, I think they have a case for claiming that they aren't responsible for data used by customers who exceeded their data allowances. Without accurate data reporting a MVNO has no way of knowing when to shut off the customers data.

Chapter 11 isn't necessarily a death knell for companies. It's actually intended to help companies repay their debts and return to profitability by letting a business keep operating while it reorganizes under oversight of a court. It lets stricken companies cancel contracts and delay creditor collection actions against it. Many well known firms have entered and emerged from Chapter 11 including General Motors, Texaco and United Airlines. Chit Chat is still in business and accepting new customers.

Source: kansas.com

20 comments:

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  1. Sad news. Another MVNO that can't keep their doors open. The market is too competitive and sadly these MVNO's cant offer something special to differentiate from the rest and gain volume.

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    1. From the article you just read: "Chapter 11 isn't necessarily a death knell for companies. It's actually intended to help companies repay their debts and return to profitability by letting a business keep operating while it reorganizes under oversight of a court. It lets stricken companies cancel contracts and delay creditor collection actions against it. Many well known firms have entered and emerged from Chapter 11 including General Motors, Texaco and United Airlines. Chit Chat is still in business and accepting new customers."

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    2. "Many well known firms have entered and emerged from Chapter 11 including General Motors..."

      Which is fine if you want to end up with a government-owned MVNO known for faulty exploding phone power-on buttons.

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  2. Not entirely unrelated to this, Virgin Mobile's data tracking feature on its web site has been disabled for at least 6 weeks now. The place in account management that tells users how much data they have used in the month/billing period.


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    1. I noticed that too. They did manage to throttle my data this month though, which is fine if I really went over. I'll have to use Usage in the phone's settings from now on to try to at least get a general idea of where I'm at..

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  3. Now, my mind boggles at what it would take to use 300GB in one month on a phone. Perhaps it was a tethered hotspot for an HD-video-hungry household?

    But using just a single mobile device? Hmm.

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  4. Dennis is right. This is not the death knell for Chit Chat but I'd be looking to port my number out if I were one of their customers. The risk is too great.

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  5. Link is missing a 'b' in blog, http://blogs.kansas.com/haveyouheard/2014/07/30/chit-chat-holdings-files-chapter-11-bankruptcy-to-settle-billing-dispute/
    Meaning folks aren't reading the fine article.

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  6. This hurts Sprint, too. They will now have to write-off (expense) several hundred thousand dollars in revenue that they already recognized. Will hurt next quarter for them. Chit Chat had unlimited T/T and LTE for $54/mo. Guess the data hog torrentz kiddies ate them up.

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  7. the 'late reporting of data' is an occurence with ringplus as well - i keep getting small chunks of data usage on the r+ portal (when i turn OFF LTE on my phone) and when i put in a ticket, i was given the same reason - -- that sprint is reporting my data usage from months ago to them..wow ..just wow.

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    1. However FreedomPop has real-time usage reporting that shows each session details on the web site only a few minutes delayed.

      So I suspect that Sprint has multiple levels of usage reporting that can be purchased by mvno's, some costing more than others (or requiring more sophisticated software).

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  8. Slow 3G, slow LTE, Sprint Spark phones that can't use LTE, bad call quality and now they can't even report data usage. Is there anything that works right on Sprint.

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    1. At least they have more nationwide coverage than T-Mobile. For the time being, anyway.

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  9. As I was the first to post here on prepaidphonenews.com, Ring Plus is scheduled to begin the option of roaming on September 1, 2014.

    As I understand, Ring Plus delayed the roll-out of roaming to it's customers simply because of the lag time of receiving the call/text/data billing information from Sprint. Since Ring Plus is a small business, they could not/did want to shoulder the liability for unpaid roaming charges that were delayed from Sprint if the Ring Plus customer did not have the funds to pay for the roaming charges in their account.

    It appears that Ring Plus has resolved/found a solution/has the funds available to manage delayed billing of roaming charges from other companies that Sprint passes along to their company. It is still not clear if Ring Plus will limit roaming only to voice calls, or include text, and/or data.

    Maybe, the prinicpals at Chit Chat should have a discussion with the prinicpals at Ring Plus and see if Chit Chat could license the Ring Plus software to better manage roaming charges for their own MVNO business.

    HELLS_BELLS

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  10. This posted on the RingPlus Discourse forum:

    "Hey everyone - we've taken a look into a bunch of these tickets and figured out what's happening with these larger charge amounts. The upshot: we're receiving old, legitimate data charges from Sprint that, for whatever reason, have been delayed by over a month.

    We're not sure why these weren't sent to us previously, but it's quite a few entries. Our billing system is automatically taking them in and converting them into billable units.

    We've been told this backlog will be cleared in the next 48 hours and all charges will be received. You will see them in your billing history if you go back between May 22nd through June 8th.

    My apologies for how confusing this is; we need to absorb these records for tax purposes."

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    1. Sprint delayed data reporting also makes it hard to manage data use on the users end as well. Ting is prime example, even with a hard cap using their dashboard controls you can easily blow past that cap as long as the data has not been reported and you are still in session, pushing you to a higher tier. Even if you were to go over and log off and then log back on before the data usage is reported you can rack up even more data usage. Why I put a hard cap on my device as well as warnings and caps through the dashboard.

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  11. Have you thought about updating Chit-Chat Dennis? I think the $9.99 plan is new?

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    1. ChitChat is coverd in Sprint and Sprint MVNO Prepaid Plans Compared | Prepaid Phone News . The $9.99 (actually $12.75 after mandatory fees) plan is not new.

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