News

Sacked by HD Blitz

2/08/2008 7:00 PM Eastern

Both Verizon Communications and Cox Communications are telling some customers they’ll have to wait at least a week or two — perhaps even more than a month — before they can get HD DVRs or set-tops.

Cox’s stash of high-definition set-tops was running low in at least three markets, a problem the operator characterized as a “brief issue” stemming from recent efforts at boosting its digital-cable penetration rate.

And last week Verizon confirmed that its HD set-tops and DVRs are in short supply, a shortfall the telco blamed on surging demand.

SET SALES ROSE

A big cause of the dwindling HD set-tops was surely Super Bowl XLII. The dramatic Feb. 3 matchup between the New York Giants and the previously undefeated New England Patriots was the biggest Big Game to date, with early estimates of 97.5 million U.S. viewers, according to Nielsen Media.

And sports fans were snapping up HD sets ahead of the game. The Consumer Electronics Association estimated this year’s Super Bowl would drive sales of 2.4 million HDTVs, based on a survey of 2,278 U.S. adults the trade group conducted last month with the Sports Video Group.

That comes on the heels of a brisk holiday season of HDTV sales, and by consequence strong demand for HD service. Time Warner Cable, for example, said last week that its fourth quarter of 2007 was its busiest quarter ever for high-definition, installing 358,000 HD boxes.

It may have added up to a perfect storm for HDTV demand.

One Cox sales agent for New England, which services Rhode Island and parts of Connecticut, when asked whether any HD set-tops were available said without prompting that Super Sunday had cleaned out the high-def inventory for the market.

Customer-service representatives for Cox’s Kansas/Arkansas system said there is a one- to two-week delay in getting an HD set-top or HD DVR, while a sales rep in Orange County, Calif., said there is up to a two-week wait for HD DVRs pending a shipment of new units from Motorola. Multichannel News called Cox’s general information numbers for those markets, inquiring about HD set-top availability.

In general, according to Cox director of media relations David Grabert, the delays are the result of the operator’s successful initiative to convert analog cable customers to digital service.

“We did better than projected in this area and this has created a brief issue in terms of set-top box inventory, which we have taken steps to resolve,” Grabert said in an e-mailed statement. Cox’s digital penetration rate across all systems was 56% at the end of September 2007.

Meanwhile, Verizon has had to “back-order HD and HD DVR set-top boxes for some customers in the short term,” manager of media relations Heather Wilner said.

In the meantime, she said, new FiOS TV customers can use a standard-definition DVR for no additional monthly charge beyond regular service fees until Verizon is able to send them an HD unit.

Verizon ordinarily charges $15.99 extra per month for an HD DVR and $9.99 for an HD receiver without a DVR.

An SD DVR is regularly $12.99 per month.

Wilner claimed Verizon was simply overwhelmed with demand for HD service, though she did not single out the Super Bowl. “We recently hit our 1 millionth customer milestone and the momentum is continuing to build,” she said.

The HD set-top shortage at Verizon came to light after an anonymous user posted a message last Monday on DSLReports.com, claiming the phone company has told customers that high-definition units will not be available until March 10.

Wilner would not confirm the date. “We don’t have a set date for when we’ll be filling any backorders that we may need to place, but we certainly expect to fill them as quickly,” she said.

UNIQUE EQUIPMENT

Verizon uses a unique, hybrid set-top box manufactured by Motorola. The devices use digital cable technology to deliver linear TV channels and provides interactive services, like video-on-demand, over Internet Protocol connections. The line of set-tops is called QIP, to indicate the combination of quadrature amplitude modulation (QAM) technology and IP.

Motorola external communications manager Anya Chambers attributed the shortage of QIP boxes to “the huge success Verizon has had marketing its HD promotions. … We’re working with them to meet this uptick in demand.”

Asked to comment on Cox’s inventory issues, Chambers said, “From our perspective, demand for HD is strong and we continue to work with all our customers in order to address their needs.”

September