Verizon FiOS Plays Catch-Up With HD STBs

 Roughly a month after Verizon Communications Inc. confirmed it ran out of high-definition (HD) set-top boxes for those wanting them with their FiOS TV service, the operator is now rushing to fill back orders for customers forced to watch TV in standard definition (SD). A shipment of HD STB/DVR units that Verizon received earlier this month has allowed the service provider to enable HD for new customers, while building inventories of the crucial equipment.

But why did Verizon run into an HD STB shortage in the first place? Verizon maintains it was caused by overwhelming demand for FiOS TV that far exceeded its expectations. However, it’s possible that part of the problem rests with its failure to place a large enough order with STB supplier Motorola Inc., poor forecasting/planning/supply chain management, or all of the above.

“I think some people will place the blame squarely on Motorola’s shoulders here by trying to link the shortages of HD DVRs at Verizon and Cox,” said Jeff Heynen, directing analyst for IPTV and Next-Gen BSS/OSS at Infonetics Research. “But honestly, the blame rests with Verizon and their conservative forecasts.”

Verizon is far from the first TV provider to run into HD STB shortages or related challenges. For example, Cox Communications  experienced a “minor shortage” of HD STBs in February, according to a company spokesperson. Infonetics’ Heynen said DirecTV also ran into shortages after its introduction of HD.

Based on that industry trend, added Heynen, Verizon should have given Motorola a larger order. “Motorola, which has a pretty solid just-in-time manufacturing model that makes the STB division one of the most profitable in an increasingly troubled company, won’t produce more than what’s listed on the order. Cox admitted that they under-ordered. Verizon should do the same and be happy with the demand they are receiving for FiOS TV.”

Verizon gave customers who signed up when there were no available HD STBs free SD units for extended periods. However, that didn’t sit well with some customers whom had bought HD TVs themselves, or received a 27-inch HD TV free for signing up for the service. (Verizon switched the giveaway promotion from HD TVs to free cameras once it ran out of the gear.)

Share this article: Email, Slashdot, Digg, Del.icio.us, Yahoo!MyWeb, Windows Live Favorites, Furl
Add this article feed to: RSS, My Yahoo, Newsgator, Bloglines