Component Shortage May Affect Other U.K. Op
By BARRY FLYNN -- Multichannel News, 7/31/2000
London-British MSO NTL Inc. admitted that it, too, has been affected by the worldwide shortage of memory chips that caused rival Telewest Communications plc to stop marketing its digital-cable offer.
The shortage "doesn't seem to be affecting us in the way it's affecting Telewest," an NTL spokeswoman said. "We're not saying it hasn't affected us, but it is very manageable. We have no plans to restrict marketing of our digital offer."
The spokeswoman indicated that NTL is able to continue marketing its digital product because it has an inventory of digital set-top boxes.
The shortage is due to box-maker Pace Micro Technology plc's inability to source enough Flash and SDRAM (synchronous dynamic random-access memory) chips from world markets. This is thought to be due to high demand for such chips from the burgeoning mobile-telephony sector, officials said.
The digital boxes Pace is supplying to networks NTL inherited when it bought Cable & Wireless Communications plc (CWC) are virtually identical to the Telewest ones, and they use the same interactive-TV middleware from Liberate Technologies.
Pace is also supplying a slightly different digital-cable box, which uses PowerTV Inc.'s middleware, to NTL for use in its non-CWC networks, but these are not due to be deployed until the fall.
When Pace released its annual results July 10, it signaled that continuing component-supply shortages-and the resulting increase in prices-had weighed on its margins.
Last week, Pace marketing director Andrew Wallace reportedly said that he believes the current acute shortage of components is a temporary matter that could be resolved within a month. Other Pace officials have also said they expect the component shortage to be resolved quickly.
Pace supplies digital set-top boxes to all of the United Kingdom's digital-TV platforms, which include British Sky Broadcasting Group plc's digital direct-to-home satellite service, as well as the digital-terrestrial platform ONdigital.
Sky Digital and ONdigital were quick to scotch any suggestion that their digital rollouts would be affected by the shortage. BSkyB said the chips in question were of "a different type" than those used in its digital-satellite set-top boxes, adding that it had more than enough stock to meet consumer demand.
ONdigital spokesman Andrew Marre said the shortage has had no impact at all on its marketing efforts, noting: "Pace is not our primary supplier.Nokia [Corp.] and [Royal] Philips [Electronics] are by far our largest suppliers."
As of May, Telewest said, 156,000 of its 1.6 million customers were connected to its digital service. The company added that it hoped to reach around 500,000 digital subscribers by the end of 2000, but that may very well be in doubt.
