Verizon (VZ) Opens The Door For Cable

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"For want of a nail, the kingdom was lost."

After a highly successful roll-out of its fiber-to-the-home broadband and TV product, Verizon (NYSE: VZ) has run into a snag. It cannot get enough set-top boxes from suppler Motorola (NYSE: MOT) to complete installations. Motorola says it is happy that there is so much demand for the product. Seriously.

Verizon’s FiOS product had its cable competitors looking for adult diapers. After years of having no competition for wiring homes with TV and broadband, Verizon started an audacious $23 billion roll-out of fiber for super-fast broadband and HDTV. Early success of the product helped drive down shares in big cable companies like Comcast (CMCSA).

All Verizon needed to do was keep on track with installations for those who subscribed to the service. The Wall Street Journal writes that "some customers are being told they’ll have to wait to get the equipment."

Of course, Verizon would like the world to think that this is Motorola’s fault. But, the big phone company knows its installation rate and its inventory levels. It should have seen the problems coming. Motorola may have very little fault in the matter, but its list of bad PR keeps growing.

Douglas A. McIntyre